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14 October, 03:54

A zero-coupon bond is selling at a deep discount price of $450. It matures in 11 years. If the yield to maturity of the bond is 6.2%, what is the duration of the bond (rounded to two places)

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  1. 14 October, 07:39
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    Duration is 11 years

    Explanation:

    The Duration of a zero coupon bond is equal to it's maturity. Since it matures at 11 years the duration of the bond is therefore also 11 years.

    It is a bond that pays no interest. A zero-coupon bond is a bond where the face value is what is repaid during the time of maturity. There are no periodic interest payments, or have so-called coupons, that is why they are referred to as zero-coupon bond. Investor gets par value when it matures.
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Home » Business » A zero-coupon bond is selling at a deep discount price of $450. It matures in 11 years. If the yield to maturity of the bond is 6.2%, what is the duration of the bond (rounded to two places)
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