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Calculate the price of a zero coupon bond that matures in five years if the market interest rate is 7?

Calculate the price of a zero coupon bond that matures in five years if the market interest rate is 7. 50 percent. (assume semi - annual compounding and $1, 000 par value. ).

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The price of a zero coupon bond is $ 692. 02 The price of a zero coupon bond is calculated by the compound interest formula as follows : FV = $1, 000 PV = ? N = 5 years i = 7. 50 percent FV = PV * (1 + i)ⁿ Then : PV = FV / (1 + i)ⁿ PV = $1, 000 / ( 1 + 0.

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AndreaMusic
6

The price of a zero coupon bond is $ 692.

02 The price of a zero coupon bond is calculated by the compound interest formula as follows : FV = $1, 000 PV = ?

N = 5 years i = 7.

50 percent FV = PV * (1 + i)ⁿ Then : PV = FV / (1 + i)ⁿ PV = $1, 000 / ( 1 + 0.

075 / 2) ^ (5 * 2) PV = $692.

02 The price of a zero coupon bond is $ 692.

02.