ABC Company issues a $1,000 face value, 10-year zero coupon bond. The YTM on a comparable...

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ABC Company issues a $1,000 face value, 10-year zero coupon bond. The YTM on a comparable bond is 9.75%. What is the current

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Answer 1

Answer #1

FV= 1000, YTM = r =9.75, n = 10 years

We assume zero coupon bond as semi annual

so m = 2

PV = FV/(1+r/m)^nm

PV = 1000/(1+(0.0975/2))^(10*2)

PV = 1000/(1+0.04875)^ 20 = 1000/2.590833 = 385.98

Answer : price = 385.98 [Thumbs up please]

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Answer 2

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