6. General Electric Incorporated issued a 30 year zero-coupon bond. If comparable AA rated bonds yield...

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6. General Electric Incorporated issued a 30 year zero-coupon bond. If comparable AA rated bonds yield...

6. General Electric Incorporated issued a 30 year zero-coupon bond. If comparable AA rated bonds yield 7.8%, what is the price of bond? (Discount at an annual rate)

(a) $1,000.00 (b) $ 0.00 (c) $1,050.60 (d) $ 105.06 (e) $ 780.00

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Answer 1

Answer #1

Price of the zero coupoun bond is present value of its maturity value

hence we can calculate price of zero coupon bond

=PV factor 7.8% for 30 years * Face value

= 0.10506*1000

=$105.06

Correct Option:(d) $ 105.06

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Answer 2

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