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
1 answer:
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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