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A zero coupon bond will be worth

​$9000

when it matures and is redeemed after

9

years. How much would an investor be willing to pay now for this bond if a

3​%

per year yield is​ desired?

5542-1 2 5 3712-6 6 1738 011-2 3 344 01234-5 6 778-9 9 35 12 457801 12345678 N-1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 20

business   economics   
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Answer #1

Present value of the bond = 9,000(P/F, 3%, 9)

                                          = 9,000(0.7664)

                                          = $6,897.60

Thus, an investor would be willing to pay $6,897.60 now.

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