You find a zero coupon bond with a par value of $10,000 and 13 years to...

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You find a zero coupon bond with a par value of $10,000 and 13 years to...

You find a zero coupon bond with a par value of $10,000 and 13 years to maturity. If the yield to maturity on this bond is 4.5 percent, what is the dollar price of the bond? Assume semiannual compounding periods.

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Answer 1

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Answer #1

Value of bond=Par value/(1+YTM/2)^(2*time period)

=10,000/(1+0.045/2)^(2*13)

=10,000/(1.0225)^26

=$5607.30(Approx).

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Answer 2

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