Concept explainers
Problems 63-66 involve zero-coupon bonds. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at the time when it matures; no interest payments are made.
Zero-Coupon Bonds A zero-coupon bond can be redeemed in 20 years for . How much should you be willing to pay for it now if you want a return of:
(a) compounded monthly?
(b) compounded continuously?
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