Suppose you purchase a zero coupon bond with a face value of $1,000 and a maturity of 25 years, for $180. If the yield to maturity on the bond remains unchanged, what will the price of the bond be 5 years from now?

915 views
0

Suppose you purchase a zero coupon bond with a face value of $1,000 and a maturity of 25 years, for $180. If the yield to maturity on the bond remains unchanged, what will the price of the bond be 5 years from now?

  1. A) $253.64
  2. B) $287.52
  3. C) $310.91
  4. D) $380.58
  5. E) $500.00
0

Answer: A

1000 FV, 25 N, -180 PV, CPT I/Y = 7.1%; -180 PV, 5 N, 7.1 I/Y, CPT FV = $253.64

You are viewing 1 out of 0 answers, click here to view all answers.

Contact us today

Ask for our academic services

Copyright SmartStudyHelp 2016. All Rights Reserved