Your firm offers a 10-year,zero coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond?

Name: Your firm offers a 10-year,zero coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond?
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Question

Quizplus · Accepted Answer

The current market price of a zero-coupon bond is calculated using the formula: Price = Face Value / (1 + Yield)^Years. For a $1,000 bond with a yield of 8.8% over 10 years, the price is $1,000 / (1 + 0.088)^10 = $430.24.

Your Firm Offers a 10-Year,zero Coupon Bond