Homework Question help Needed

Accounting
Tutor: None Selected Time limit: 1 Day

A zero coupon bond has a face value of $1,000 and matures in 4 years. Investors require a (n) 6.1% annual return on these bonds. What should be the selling price of the bond? (Round to the nearest cent)

Jul 1st, 2015

Thank you for the opportunity to help you with your question!

A zero coupon bond is a bond that makes no periodic interests but it is sold at a discount from face value.

 Selling price =M/(1+r)^n

   where ;M=maturity value.

              r=investor required anual yield /2

             n=number of years till maturity


price=1000*(1+0.0305)^4=1127.6958

to the nearest cents=1127.70


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 1st, 2015

Hey Ellery ,I might go offline soon.However at any time am availble for further discussion.Even now.Nice time.


Jul 1st, 2015

States this is incorrect

Jul 1st, 2015

What is incorrect, can I upload a referrence for you,or I can explain where you did not get

Jul 1st, 2015

The value 0.0305 is  coming from 6.1%/2=3.05%=3.05/100=0.0305

Jul 1st, 2015

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