markcardenas5907 markcardenas5907

14-07-2020
Business

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What is the value of zero-coupon bond with a par value of $1,000 and a yield to maturity of 5.20%? The bond has 12 years to maturity.

Respuesta :

Chrisnando Chrisnando

15-07-2020

Answer:

$544.265

Explanation:

Given:

FV = $1,000

Yield to maturity = 5.2%

N = 12 years

Required:

Find the value of the zero coupon bond.

Use the formula:

PV = FV * PVIF(I/Y, N)

Thus,

PV = 1000 * PVIF(5.2%, 12)

= 1000 * 0.544265

= $544.265

The value of the zero coupon bond is $544.3

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