A zero coupon bond pays no annual coupon interest payments. When it matures at the end of 7 years it pays out $1,000. If investors wish to earn 5.25% per year on this bond investment, what is the maximum price she would be willing to pay for the zero coupon bond? (Round to the nearest dollar.) O $748.53 O $1000.00 $698.95 $834.12

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.