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Valuing a Zero Coupon Bond I. Pricing a Zero coupon Face Value at Maturity = $ 1,000 Time to Maturity = 10 ( In years) Interest Rate on Bond = 4.55% (Current market interest rate for def Price of the Bond = $ 640.85 II. Computing Yield to Maturity on a Zero Coupon Price of Bond = $ 593.82 YTM on the Bond = 5.35%

Zero Coupon Bond

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Page 1: Zero Coupon Bond

Valuing a Zero Coupon BondI. Pricing a Zero couponFace Value at Maturity = $ 1,000 Time to Maturity = 10 ( In years)Interest Rate on Bond = 4.55% (Current market interest rate for default-free bonds with given maturity)

Price of the Bond = $ 640.85

II. Computing Yield to Maturity on a Zero CouponPrice of Bond = $ 593.82

YTM on the Bond = 5.35%

Page 2: Zero Coupon Bond

(Current market interest rate for default-free bonds with given maturity)

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