Question: How much do you pay for a zero coupon government bond that has a term of 30 years, an interest rate of 10 %, and

How much do you pay for a zero coupon government bond that has a term of 30 years, an interest rate of 10%, and a par value of $1000.

Step by Step Solution

★★★★★

3.58 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To calculate the price of the zero coupon bond we use ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

A bonds are traded in the market at 10% YTM at all maturities, and you buy an A grade 10 year bond with a 9% coupon, a face value of $1,000 and an annual coupon payment.Let's say immediately after...

Q:

A bond has a coupon rate of 9% p.a. The coupons are paid every 6 months. The bond has a $1,000 face value and is priced at par value. The bond has 16 years to maturity. If interest rates suddenly...

Q:

For each problem, show your work steps. A correct answer with no work shown gets half credit (which means you fail the assignment). An incorrect answer with no work receives 0 credit. With time value...

Q:

1) A 10-year corporate bond has a coupon rate of 6% with annual payments. If interest rates rise to 8% on similar bonds, then what is the value of the bond in the marketplace? 2) A 10-year corporate...

Q:

5) A 30 -year annual bond is offered at 5%. After that the buyer of the bond sells the bond to someone else, but in between interest rates rose to 5.5%. Why is the first buyer of the bond upset with...

Q:

Par value is 1000 1) A 100-year corporate bond has a coupon rate of 10% with semi-annual payments. If the current value of the bond in the marketplace is $400, then what is the Yield-to-Maturity...

Q:

1. A 100-year corporate bond has a coupon rate of 9 % with semi-annual payments. If the current value of the bond in the marketplace is $400, then what is the Yield-to-Maturity (YTM)? 2. How much do...

Q:

X = 2 ! ! ! A 1 0 0 - year corporate bond has a coupon rate of x % with semi - annual payments. If the current value of the bond in the marketplace is $ 4 0 0 , then what is the Yield - to - Maturity...

Q:

1) How much do you pay for a zero coupon government bond that has a term of 30 years, an interest rate of 12%, and a par value of $1000. 2) A taxable bond has a yield of 12% and a municipal bond has...

Q:

How much do you pay for a zero coupon government bond that has a term of 30 years, an interest rate of 10 %, and a par value of $1000.

Q:

Assume that HCA is evaluating the feasibility of building a new hospital in an area not currently served by the company. The company's analysts estimate a market beta for the hospital project of 1.2,...

Q:

Ceelo Company purchased (at a cost of $10,200) and used 2,400 pounds of materials during May. Ceelos standard cost of materials per unit produced is based on 2 pounds per unit at a cost $5 per pound....

Q:

Compulsory membership provisions and dues check - off are forms of union seeurity. True False

Q:

The market demand and supply schedules for a premium Belgian chocolate in Hong Kong are shown as follows: Quantity Demanded Price per box Quantity Supplied (No. of boxes) (No. of boxes) 5,000 3,000...

Q:

Two random variables X and Y have a joint PDF fX,Y(X, y) that is equal to a constant K in the shaded region shown in Figure, and is equal to zero elsewhere. (a) (i) Find K (ii) Make a labeled sketch...

Q:

At 31 March 2018, Dextor Ltd provided you with information regarding two of their property, plant and equipment (PPE) items: If applicable, in the journal entries below for both 'A' and 'B', provide...

Q:

Build a web-based application. It should be about giving marks to a picture of a man drawn by a small child. This should happen through machine learning because a model has to be developed. When the...

Q:

Statement Of Owner's Equity Reporting Net Income Betsy Ray started an accounting service on June 1, 20--, by investing $20,000. Her net income for the month was $10,000, and she withdrew $8,000....

Q:

Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C1 60Q1 and C2 60Q2, where Q1 is the output of Firm 1 and Q2 the output of...

Q:

Is the firms expansion path always a straight line?

Q:

Why do some investors put a large portion of their portfolios into risky assets, while others invest largely in risk-free alternatives?

Q:

You have the following sales data for the past 12 months. Develop a line graph for these data.

Q:

You have the following data: a. Construct a frequency distribution for these data. Use the 2k n guideline to determine the number of classes to use. b. Develop a relative frequency distribution...

Q:

The Honda Ridgeline was among the highest-ranked compact pickups in J.D. Power and Associates annual customer-satisfaction survey. The study also found that models with high ratings have a tendency...