The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. What is the price of a 4-year maturity bond with a 12% coupon rate paid annually (Par value = $1,000.)
A)$742.09
B)$1,222.09
C)$1,000.00
D)$1,141.92
E)None of the options

Question

The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000.  What is the price of a 4-year maturity bond with a 12% coupon rate paid annually (Par value = $1,000.)
A)$742.09 
B)$1,222.09 
C)$1,000.00 
D)$1,141.92 
E)None of the options

Quizplus · Accepted Answer

(1,000/742.09)^1/4 - 1 = 7.74%; FV = 1,000, PMT = 120, n = 4, i = 7.74, PV = $1,141.92.

The Following Is a List of Prices for Zero-Coupon Bonds