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Assuming semi-annual compounding, what is the price of a zero coupon bond that matures in 3 years if the market interest rate is 5.5 percent? Assume par value is $1000

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Assuming semi-annual compounding, what is the price of a zero coupon bond that matures in 3 years if the market interest rate is 5.5 percent? Assume par value is $1000
Answered Same Day Dec 24, 2021

Solution

Robert answered on Dec 24 2021
130 Votes
QUESTION
Assuming semi-annual compounding, what is the price of a zero coupon bond that matures in 3
years if the market interest rate is 5.5 percent? Assume par value is $1000.
SOLUTION
CALCULATION OF PRICE OF A ZERO COUPON BOND:-
ZERO COUPON BOND VALUE = F / (1+R)
t
Where,
F = face...
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