What Is the Issue Price of a Zero Coupon Bond

question 57

Multiple Choice

What is the issue price of a zero coupon bond with 15 years to maturity if it is sold to yield 7.55%?

• A) $250.00
• B) $362.31
• C) $335.62
• D) $1,000.00

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Definitions:

Interest Expense

The total charges faced by a business for financing through borrowed money over a duration.

Interest Payable

The amount of interest expense that has been incurred but not yet paid by a company during a given period.

Current Liabilities

Short-term financial obligations that are due to be paid within one year, including accounts payable, short-term loans, and taxes payable.

Long-term Debt

Loans or other forms of credit that are due for repayment in more than one year's time.