Ben Kerr is contemplating buying a zero coupon bond that matures in 11 years and


label Mathematics
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schedule 1 Day
account_balance_wallet $5

I need help finding how much he should pay for the bond

Oct 2nd, 2015

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

A zero coupon bond does not pay annual interest. It should be bought at a discount such that the discount should yield an acceptable YTM to investors.

 To calculate the YTM:

(Face value of the bond/price of bond)^1/n -1,  n=years to mature

Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 3rd, 2015

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Oct 2nd, 2015
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