A zero-coupon bond is a security that pays no interest, and is therefo

1.	A zero-coupon bond is a security that pays no interest, and is therefore bought at a substantial discount from its face value. If the interest rate is 5% with annual compounding how much would you pay today for a zero-coupon bond with a face value of $1,900 that matures in 8 years?
Answer» Answer: Purchasers of ZERO coupon bonds earn interest by the bond being sold at a discount to its par value. A coupon-bearing bond PAYS COUPONS each period, and a coupon plus principal at maturity. The PRICE of a bond comprises all these PAYMENTS discounted at the yield to maturity. Hope it will help yu

A zero-coupon bond is a security that pays no interest, and is therefore bought at a substantial discount from its face value. If the interest rate is 5% with annual compounding how much would you pay today for a zero-coupon bond with a face value of $1,900 that matures in 8 years?

Answer»

Answer:

Purchasers of ZERO coupon bonds earn interest by the bond being sold at a discount to its par value. A coupon-bearing bond PAYS COUPONS each period, and a coupon plus principal at maturity. The PRICE of a bond comprises all these PAYMENTS discounted at the yield to maturity.

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A zero-coupon bond is a security that pays no interest, and is therefore bought at a substantial discount from its face value. If the interest rate is 5% with annual compounding how much would you pay today for a zero-coupon bond with a face value of $1,900 that matures in 8 years?

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