Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5%. For a face value of

$100, the bond will initially trade for:

If the bond’s yield to maturity remains at 5%, what will its price be five years later? If you purchased the bond at $23.14 and sold it five years later, what would the rate of return of your investment be?

Transcribed Image Text:

P (30 years to maturity) = 100 1.0530 $23.14