A zero-coupon bond pays only its face value at the end of a fixed number of years (its term to maturity)with no other interest or coupon payments.How much would you pay for this type of bond if the face value of $100 would be paid back at the end of 20 years and the interest rate were 7 percent? How much would you pay if the interest rate were 6 percent?

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The Answer of A zero-coupon bond pays only its face value at the end of a fixed number of years (its term to maturity)with no other interest or coupon payments.How much would you pay for this type of bond if the face value of $100 would be paid back at the end of 20 years and the interest rate were 7 percent? How much would you pay if the interest rate were 6 percent?

A Zero-Coupon Bond Pays Only Its Face Value at the End