A risk-free, zero-coupon bond with a face value of $1,000 has 15 years to maturity. If the YTM is 5.8%, which of the following would be closest to the price this bond will trade…

Question

asked Feb 17, 2020 39.8k views

1 Answer

Curtis · Answer 1 · 2020-02-24T04:46:59+0000

Answer:

price = $429.25

so correct option is d. $429

Step-by-step explanation:

given data

face value = $1,000

time = 15 year

rate = 5.8 % = 0.058

to find out

price of bond

solution

we get here price that is express as

price =
$(face\ value)/((1+rate)^(time))$ ........................1

put here value we get price

price =
(1000)/((1+0.058)^(15))

price = $429.25

so correct option is d. $429