Question

PLEASE PUT THE FORMULA OF EXCEL. THANK YOU

You find a zero coupon bond with a par value of $10,000 and 17 years to maturity. The yield to maturity on this bond is 4.9 percent. Assume semiannual compounding periods.

What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

d6 Settlement date: 1/1/2000

d7 maturity date:1/1/2017

d8: coupon rate: 0.00%

d9: coupons per year: 2

d10: redemption value: 100%

d11: yield to maturity: 4.90%

d12: par value: $10000

Dollar price: $

Answer 1

Information provided:

Par value= future value= $10,000

Coupon rate= 0%/2 = 0%

Coupon payment= 0.00*$10,000= $0

Time= 17 years*2 = 34 semi-annual periods

Yield to maturity= 4.9%/2 = 2.45% per semi-annual period

The price of the bond is calculated by computing the present value.

The present value is computed by entering the below in a financial calculator:

FV= 10,000

N= 34

I/Y= 2.45

Press the CPT key and PV to compute the present value.

The value obtained is 4,391.30.

The price of the bond is $4,391.30.