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A zero-coupon bond is a bond where investors do not receive any periodic coupon payments. Instead, investors pay a discount price to the par value,
A zero-coupon bond is a bond where investors do not receive any periodic coupon payments. Instead, investors pay a discount price to the par value, and receive the par value when the bond matures. That's why zero-coupon bond is also called pure-discount bond.
Company XYZ has a zero-coupon bond with par value of $1,000 that will mature in 20 years. Assuming that the YTM on this bond will remain constant @ 6.66%, what will the bond price be at the end of year 13?
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