Thank you! One year ago you purchased a zero coupon bond and paid $780 for it. I

Question

Thank you!

One year ago you purchased a zero coupon bond and paid $780 for it. It now has 5 years remaining to maturity, and its yield to maturity is 8%. Its face value is $1,000. Find the change in dollar value of the bond in this period. Use annual compounding. $680.58 $689.33 $ 99.42 $730.29 $99.42 A zero coupon bond will mature in 10 years and pay its face value of $1,000. Its current market value is $620. What is its implicit yield to maturity based on semi-annual compounding? 4.896% 2.42% 38.00% 3.80% 61.29%

Explanation / Answer

9.

c) - $ 99.42

Price of one year ago (a) = 780 Current price of zero coupon bond (b) = Present value of future benefit = Face value*Discount factor for 5th year@8% = 1000*(1.08^-5) = 680.58 Change in dollar value (b)-(a) = -99.42

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