Question

There are zero coupon bonds outstanding that have a YTM of 5.73 percent and mature in 23 years. The bonds have a par value of $10,000. If we assume semiannual compounding, what is the price of the bonds?

Answer 1

Solution:

Given

There are zero coupon bonds outstanding that have a YTM of 5.73 %

The bonds have a par value of $10,000

Now , If we assume semiannual compounding, what is the price of the bonds :

P = $10,000 (PVIF 5.73 %,60)

P = $2,143.67