A zero- coupon bond is to be issued at a price of £50, with an annualised rate of return of 5 per cent for 6 years. What would the redeemable price be?

Name: A zero- coupon bond is to be issued at a price of £50, with an annualised rate of return of 5 per cent for 6 years. What would the redeemable price be?
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Question

Quizplus · Accepted Answer

The redeemable price of a zero-coupon bond can be calculated using the formula: Future Value = Present Value * (1 + rate)^n. Here, £50 * (1 + 0.05)^6 = £67.

A Zero- Coupon Bond Is to Be Issued at a Price