If you purchase a 5-year,zero-coupon bond for $500,how much could it be sold for 3 years later if interest rates have remained stable?

Question

Quizplus · Accepted Answer

A zero-coupon bond increases in value over time at a rate determined by the yield to maturity. Assuming stable interest rates, the bond's value after 3 years can be calculated using the formula for compound interest. The bond's future value after 5 years is $1000 (since it is a zero-coupon bond), so after 3 years, it would be worth $757.86.

If You Purchase a 5-Year,zero-Coupon Bond for $500,how Much Could