Question

9.Huawei, Inc. wants to issue new 6-months bill with zerc coupon for some much-needed short-term funding...

9.Huawei, Inc. wants to issue new 6-months bill with zerc coupon for some much-needed short-term funding needs. Currently, the market yield for similar bill is 6 percent, if the par value of the bill is $1000, how much will the bill sell for in the market?
A.$966.18
B.S970.87
C.$953.26
D.SI000
E.$1060
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Answer #1

9.Huawei, Inc. wants to issue new 6-months bill with zerc coupon for some much-needed short-term funding needs. Currently, the market yield for similar bill is 6 percent, if the par value of the bill is $1000, how much will the bill sell for in the market?

Par value = $1,000

zero coupon bond yield for six months = 6%/2 = 0.03

Price of the bond = Par value/(1 + r)^n

where, n = 1 6-month period

Price of the bond = 1000/(1 + 0.03)^1

Price of the bond = 1000/(1.03)^1

Price of the bond = 1000/1.03

Price of the bond = 970.8737864078

Price of the bond = $970.87

Option B is correct

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