# Assuming semiannual compounding, what is the price of a zero coupon bond with 9 years to maturity...

Assuming semiannual compounding, what is the price of a zero coupon bond with 9 years to maturity paying $1,000 at maturity if the YTM is (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.): a.7 percent b.12 percent c.17 percent ## Pricing of a Bond: A bond is issued by the issuer (organization or government) and is repaid in the form of coupon payments (annual or semi annual coupons) and face value at the maturity. A bond can be a zero coupon bond if there are no coupon payments. The price of the bond is the present value of all the payments discounted at yield to maturity. ## Answer and Explanation: a. Price of bond at 7% =$538.36

b. Price of bond at 12% = $350.34 c. Price of bond at 17% =$230.28

Calculating the price of bond at 7%:

• Face...

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Bond Valuation: Formula, Steps & Examples

from Finance 301: Corporate Finance

Chapter 7 / Lesson 6
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