Bond B matures in 16 years, has face (par) value of $1000, and has a yield to maturity of 8.00%. Bond B is zero coupon bond. What is the value of the bond?
Bond B matures in 16 years, has face (par) value of $1000, and has a yield to maturity of 8.00%. Bond B is zero coupon bond. What is the value of the bond?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Bond B matures in 16 years, has face (par) value of $1000, and has a yield to maturity of 8.00%. Bond B is zero coupon bond.
What is the
Expert Solution
Step 1
| BOND B | |
| Yield to maturity Years | 16 |
| coupon amount (PMT) | 0 |
| Face value (FV) | 1000 |
| Yield rate | 8.00% |
Step 2
| 63 | BOND B | |
| 64 | C | D |
| 65 | Yield to maturity Years | 16 |
| 66 | coupon amount (PMT) | 0 |
| 67 | Face value (FV) | 1000 |
| 68 | Yield rate | 8.00% |
| 69 | ||
| 70 | Present value | $291.89 |
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