Use the table for the question(s)below.
Consider the following yields to maturity on various one-year zero-coupon securities:
- The price (expressed as a percentage of the face value)of a one-year,zero-coupon,corporate bond with a BBB rating is closest to:
A)95.60
B)94.16
C)95.42
D)94.70
E)95.10

Question

Use the table for the question(s)below.
Consider the following yields to maturity on various one-year zero-coupon securities:
- The price (expressed as a percentage of the face value)of a one-year,zero-coupon,corporate bond with a BBB rating is closest to:
A)95.60 
B)94.16 
C)95.42 
D)94.70 
E)95.10

Quizplus · Accepted Answer

To find the price of the bond, we need to use the formula: 
Price = Face Value / (1 + Yield/100)
For the BBB rating, the yield is 5.30. 
Therefore, Price = 100 / (1 + 5.30/100) = 94.70
The closest answer is D.

Use the Table for the Question(s)below