CFA Practice Question

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

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.
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