Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research and development at its Skynet division. Each bond will have a face value of
$1,000
and will mature in
15
years. The yield on the bond is
8.5%.
What is the fair price for one of Cyberdyne's zero coupon bonds?
The fair price for one of Cyberdyne's zero coupon bonds is
$___
(Round to the nearest cent.)
The fair price for one of zero coupon bond is computed as shown below:
= Face value / (1 + YTM)N
= $ 1,000 / (1 + 0.085)15
= $ 294.14 Approximately
Feel free to ask in case of any query relating to this question
Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research...
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