Fixed Income Q41

0. A zero coupon bond with a face value of $500 matures in 10 years. At a market discount rate of 5% and assuming annual compounding, the price of the bond is closest to:

  • Option : B
  • Explanation : Value of zero − coupon bond =Face value/(1 + coupon rate)N = 500/(1.05)10 = $306.96
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