Homework 10 - A zero coupon bond will pay $1000 at
1. (Problem 42.1) A zero coupon bond will pay $1000 at the end of 10 years, and is currently selling for $500. What is the annual return earned by the purchaser?
2. (Problem 42.5) An investor purchases a 26-week T-bill with face value $10,000 for $X and earns an annual effective rate of 4.17%. Determine X.
3. (Problem 42.6) An investor buys a zero-coupon bond with par value $1,000 for $493.63. The maturity date is Y years and the yield rate convertible semi-annually is 8%. Calculate Y .
4. (Problem 42.9) A $1000 par value bond bearing a 5% coupon rate payable semi- annually will be redeemed at 108% at the end of 7 years. Find the price to yield an investor 5% convertible semi-annually.
Solution: Homework 10 - A zero coupon bond will pay $1000 at