Question
Zero Coupon Bond A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it
Zero Coupon Bond A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made. Use this information to answer questions 10-12 below.
Use the Zero Coupon Bond information above to answer this question.
A zero coupon bond with a face value of $26,000 matures in 26 years. What should the bond be sold for now if its rate of return is to be 3.885% compounded annually?
$ . Round to the nearest dollar.
Use the Zero Coupon Bond information above to answer this question.
You buy a zero coupon bond with a face value of $14,000 that matures in 28 years for $7,000. What is your annual compound rate of return?
%. Round to the nearest thousandths of a percent (3 decimal places).
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