If You Purchase a Five-Year, Zero-Coupon Bond for $500, How

question 30

Multiple Choice

If you purchase a five-year, zero-coupon bond for $500, how much could it be sold for three years later if interest rates have remained stable?

• A)$650.00
• B)$723.05
• C)$757.86
• D)$800.00 500 = 1000/(1 + i)5
• 14)87% = i
• Three years later
• Price = 1000/(1.1487)2

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