You are thinking of investing in a zero coupon bond that has 13 years to maturity....

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Question

business finance

Answer 1

Answer #1

HI

For zero coupon bond

Present Value = Face Value/(1+rate)^n

Here n = number of periods= 13*2 = 26 (since semi annual compounding)

rate = 4.7%/2 = 2.35%(semiannually)

So present value = 1000/(1+2.35%)^26

= $546.66

Thanks

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Answer 2

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