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The interest rate is 5 percent per year. Compute the six-month zero-coupon bond price using a...

The interest rate is 5 percent per year. Compute the six-month zero-coupon bond price using a simple interest rate.

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Answer #1

let the par value of zero coupon bond be $ 1000

Interest = Face value * Interest *n/12

             = 1000 * .05 *6 /12

              = 25

Price of zero coupon bond = Face value - interest

                            = 1000-25

                            = $ 975

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