A zero coupon bond matures in 5 years. The market interest for the bon

QUESTION

A zero coupon bond matures in 5 years. The market interest for the bond is 10%.What will be the price of the zero?
Calculating the price of the Zero-coupon bond using excel sheet:We know that for Zero coupon bond, there will be no coupon payments.Therefore, the coupon payment is zero.According to the given information,Number of years to maturity = 5market interest rate = 10%Let us assume the face value of the bond is $1000Calculating the price of the bond using excel sheet;Step1: Go to excel and click “insert” to insert the

function.Step2: Select the “PV” function as we are finding the price of the bond in this case.Step3: Enter the values as Rate = 10%; Nper = 5 ; PMT = 0 ; FV = -1000Step4: Click “OK” to get the desired value.The value comes to ” $620.92″Therefore, the price of the bond is $621

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION