CFA Practice Question
If an investor's required return is 12 percent, the value of a 10-year maturity zero-coupon bond with a maturity value of $1,000 is closest to:
A. $312
B. $688
C. $1,312
Explanation: n = 20 periods
i = 6% per period
$1,000 x 0.312 = $312
i = 6% per period
$1,000 x 0.312 = $312
User Contributed Comments 3
| User | Comment |
|---|---|
| arudkov | how do we know that all calculations 2 be mane on semiannual basis? a ussed annual calculations and got 321 |
| Jlinne | assume semi-annual for all bond calculations unless stated otherwise. even for zero coupon bonds. |
| cfastudypl | use present value> 1/(1.06^20)*1000 = 311.8 approx to 312. |