Question

You purchase a zero coupon bond with 22 years to maturity and a yield to maturity of 5.49 percent. The bond has a par value of $1,000. What is the implicit interest for the first year? Assume semiannual compounding

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**Answer:**

Current price of ZCB = Redemption / (1 + 0.0549/2)^44

Current price of ZCB = 1000 / 3.292

**Current price of ZCB = $303.7667**

Price of ZCB after one year = Redemption / (1 + 0.0549/2)^42

Price of ZCB after one year = 1000 / 3.11852516

**Price of ZCB after one year = $320.6644**

3. Implied Interest = Price after one year – Current Price

**Implied Interest = $320.6644– $303.7667 =
$16.90**

You purchase a zero coupon bond with 21 years to maturity and a
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semiannual compounding.
$17.24
$17.39
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$15.60
$17.12

There is a zero coupon bond that sells for $404.23 and has a par
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1. A 9-year zero coupon bond has a yield to maturity of
11.8 percent, and a par value of $1,000. What is the
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2. A 7-year bond has a 8 percent coupon rate with the interest
paid in semi annual payments. The yield to maturity of
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$1,000. What is the price of the bond?
3. A 12-year bond has a 9 percent annual coupon, a yield to
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The implicit interest in the first year of the bond's life is
? (Round to the nearest cent.)

Suppose you purchase a zero coupon bond with a face value of
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A) $1000
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