A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000. If the bond matures in eight years, the bond should sell for a price of _______ today.

Name: A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000. If the bond matures in eight years, the bond should sell for a price of _______ today.
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Question

Quizplus · Accepted Answer

The price of a zero-coupon bond is calculated using the formula: Price = Par Value / (1 + Yield)^Years. Plugging in the values: $1,000 / (1 + 0.09)^8 = $501.87.

A Zero-Coupon Bond Has a Yield to Maturity of 9