2. Today, you want to sell a $1,000 face value zero coupon bond you currently ow
ID: 2710872 • Letter: 2
Question
2. Today, you want to sell a $1,000 face value zero coupon bond you currently own. The bond matures in 4.5 years. How much will you receive for your bond if the market yield to maturity is currently 5.33 percent? Ignore any accrued interest.2. Today, you want to sell a $1,000 face value zero coupon bond you currently own. The bond matures in 4.5 years. How much will you receive for your bond if the market yield to maturity is currently 5.33 percent? Ignore any accrued interest.
2. Today, you want to sell a $1,000 face value zero coupon bond you currently own. The bond matures in 4.5 years. How much will you receive for your bond if the market yield to maturity is currently 5.33 percent? Ignore any accrued interest.
Explanation / Answer
Amount receivable from the bond if market YTM is 5.33% and bond matures in 4.5 years= 1000 *[1/(1.0533)4.5]
= 1000 * 0.791351173
= $791.351173