zacharysharpe332 zacharysharpe332

23-09-2019
Business

contestada

A zero-coupon bond pays no interest payments to the bondholder. It has a $1,000 par value and matures in 5 years. What is the value of this bond if the market rate of interest on similar risk bonds is 10%?

Respuesta :

federico1636 federico1636

26-09-2019

Answer:

$620.92

Explanation:

Present Value Paid at Maturity = Face Value / (Market Rate/ 100) ^ Number Payments

Present Value of Interest Payments = Payment Value * (1 - (Market Rate / 100) ^ -Number Payments) / Number Payments)

Present Value of Bond = Present Value Paid at Maturity + Present Value of Interest Payments

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