If a one year zero-coupon bond has a face value of $1,000 and a discount rate of 8.7 percent, its original selling price is
A) $900.
B) $920.
C) $950.
D) $960.

Name: If a one year zero-coupon bond has a face value of $1,000 and a discount rate of 8.7 percent, its original selling price is A) $900. B) $920. C) $950. D) $960.
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Question

Quizplus · Accepted Answer

The original selling price of a zero-coupon bond is calculated by dividing the face value by (1 + discount rate). So, $1,000 / (1 + 0.087) = $920.15, which rounds to $920.

If a One Year Zero-Coupon Bond Has a Face Value