Answered

From health tips to tech hacks, find it all on IDNLearn.com. Get prompt and accurate answers to your questions from our community of experts who are always ready to help.

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 4.9 percent, what is the dollar price of the bond

Sagot :

Abiolataiwo2015idn

Answer:

$18,763.38

Explanation:

Calculation to determine the dollar price of the bond

Using this formula

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

Let plug in the formula

Value of bond=10,000/(1+0.049/2)^(2*13)

Value of bond=10,000/(1.0245)^26

Value of bond=10,000/1.8763378

Value of bond=$18,763.38(Approx).

Therefore the dollar price of the bond is $18,763.38

Thank you for being part of this discussion. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. IDNLearn.com is your reliable source for accurate answers. Thank you for visiting, and we hope to assist you again.