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Homework answers / question archive / What is the price today of a zero coupon bond with a face value of $4,000 if the relevant market yield is 9% pa and with 2 years to maturity? Calculate the price to the nearest dollar
What is the price today of a zero coupon bond with a face value of $4,000 if the relevant market yield is 9% pa and with 2 years to maturity? Calculate the price to the nearest dollar
We can calculate the price of the bond by using the following formula in excel:-
=-pv(rate,nper,pmt,fv)
Here,
PV = Price of the bond
Rate = 9%
Nper = 2 periods
Pmt = 0
FV = $4,000
Substituting the values in formula:
= -pv(9%,2,0,4000)
= $3,366.72 Or $3,367