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Orlov [11]
3 years ago
10

You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to maturity on this bond is 4.7 perc

ent. Assume semiannual compounding periods. What is the price of the bond

Business
1 answer:
Nikitich [7]3 years ago
8 0

Answer:

$4,136.77

Explanation:

In this question, we use the present value formula which is shown in the attachment below:

Given that,  

Future value = $10,000

Rate of interest = 4.7%  ÷ 2 = 2.35

NPER = 19 years  × 2 = 38 years

PMT = $0

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

After solving this, the price of the bond is $4,136.77

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