Answered

What is the value of a zero-coupon bond with a par value of $1,000 and a yield to maturity of 6.60%? The bond has 19 years to maturity.

Answer :

Answer:

$296.90

Explanation:

For computing the value of the zero coupon bond we need to apply the present value formula i.e to be shown in the attachment below:

Given that,  

Future value = $1,000

Rate of interest = 6.60%

NPER = 19 years

PMT = $0

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the value of zero coupon bond is would be $296.90

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