Consider a zero-coupon bond with $1,000 face value and 20 years to maturity.The price at which this bond will trade if the YTM is 6% is closest to:
A)$215
B)$312
C)$335
D)$306
E)$402

Question

Quizplus · Accepted Answer

Using the formula:
Price = face value / (1 + YTM)^n
where n is the number of years to maturity.
Plugging in the values:
Price = 1000 / (1 + 0.06)^20
Price = $312.18 (rounded to the nearest dollar)
Therefore, the closest answer choice is B) $312.

Consider a Zero-Coupon Bond with $1,000 Face Value and 20