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Question 9 Bond A is zero-coupon bond paying $100 one year from now. Bond B is a zero-coupon bond paying $100 two years from now. Bond C is a 10% coupon bond that pays $10 one year from now and $10 plus the $100 principal two years from now. The yield to maturity on bond A is 10%, and the price of bond B is $84.18. Assuming annual compounding, what is the price of Bond A?

Sagot :

The price of bond A is $90.91

The computation of the price of bond A is as follows:

= Paying amount × (1 + rate)^-1

= $100 × (1 + 0.10)^-1

= $100 × 1.1^-1

= $90.91

Therefore we can conclude that the price of bond A is $90.91

Learn more about the coupon rate here: brainly.com/question/16913107

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