The market value of an 18-year zero-coupon bond with a maturity value of $1,000 discounted at a 12% annual interest rate with semi-annual compounding is closest to:
Answers
Answered by
0
Answer:
Explanation:
580 as it reduction
Answered by
0
The present value (PV) amounts to Rs8,147.25
Explanation:
The Present value is to be computed as:
Using the Excel formula of PV as:
=Pv(rate,nper,pmt,fv,type)
where
rate is 12%
But it is semi- annual, so it will be r/2
r = 12% / 2
nper is number of years is 18 years
And it semi- annual, so nper will be nper ×2
nper = 18 × 2
PMT is Rs 0
Fv is future value is Rs -1,000
Putting the values above:
=Pv(12%/2,18×2,0,-1000,0)
= Rs 8,147.25 or Rs 8,147
Similar questions