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15 February, 16:29

You are purchasing a 20-year, zero-coupon bond. the yield to maturity is 8.68 percent and the face value is $1,000. what is the current market price?

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  1. 15 February, 17:49
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    The answer is "$182.8".

    Explanation:

    yield to maturity = 8.68 % = 0.0868

    face value = $1,000

    time period = 20 years

    We can solve this by using the formula;

    P = $1000 / (1 + 0.0868/2) ²⁰ˣ²

    P = $1000 / (1.0434) ⁴⁰

    P = $1000/5.47

    P = $182.8
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