Problems 6366 involve zero-coupon bonds. A zero-coupon bond is a bond that is sold now at a
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Problems 63–66 involve zero-coupon bonds. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at the time when it matures; no interest payments are made.
A child’s grandparents are considering buying an $80,000 face-value, zero-coupon bond at her birth so that she will have enough money for her college education 17 years later. If they want a rate of return of 6% compounded annually, what should they pay for the bond?
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