U.S. Delay Corporation, a subsidiary of the Postal Service, must decide whether to issue zero coupon bonds or quarterly payment bonds to fund construction of new facilities.  The $1,000 par value quarterly payment bonds would sell at $795.54, have a 10% annual coupon rate, and mature in 10 years.  

At what price would the zero coupon bonds with a maturity of 10 years have to sell to earn the same effective annual rate as the quarterly payment bonds?

Answer rating: 100% (QA)

To find the price at which the zero coupon bonds with a maturity of 10 years would have to sell to e... View the full answer