Question 2 (1 point) Bond B matures in 23 years, has a face (par) value of...

Question

Question

Answer 1

Answer #1

For a zero coupon bond, the bond value is calculated using the following formula:

Bond Value = Face value of bond/(1+ rate of interest) ^ number of years till maturity

Given Face value = 1000

rate of interest = yield to maturity = 9.5%

time till maturity = 23 years

Thus, Bond value = 1000/(1+.095)^23 = 124.0153 = 124.02 to the nearest cent.

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Answer 2

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