--%>
Assignment Help - homework help

Problem on zero bond price

You are provided a bond which will pay no interest however will return the par value of $1,000 20 years from now. When your needed return for this bond is 7.35%, what are you willing to reimburse or pay?

E

Expert

Verified

Zero-coupon bond price = F (1 + i)-n = $1,000 (1 + .0735)-20 = $1,000(.2420800635) = $242.08

   Related Questions in Microeconomics

  • Q : Monopolistic competition and oligopoly

    One of my friends can't succeed to get the solution of this question. Give me solution of this question. Under what circumstances can monopolistic competition and oligopoly describe stable prices?

    		•
  • Q : Define surplus budget Surplus budget:

    Surplus budget: When receipts of government are greater than its receipts, it is termed as surplus budget.

    		•
  • Q : Reallocation of resources-Government

    Describe the Reallocation of resources objective of the government budget.

    		•
  • Q : Explain facing horizontal line by

    When the demand curve facing a firm is a horizontal line, then there demand is perfectly: (w) elastic at each quantity. (x) inelastic where quantity demanded is zero. (y) insensitive to the price of good. (z) unresponsive to changes within the prices

    		•
  • Q : Discounted by an appropriate interest

    A fundamental principle of finance is that the net cash flows expected by an investment are: (w) all future revenues expected by the investment minus the purchase price of the capital. (x) negatively associated to the interest rates related with borrowing investment f

    		•
  • Q : Determine water elasticity of production

    When 200,000 gallons of water are applied per acre, 4 tons are harvested by each acre of linguini trees yearly, but cutting back to 160,000 gallons causes the crop per acre to reduce to 2 tons yearly. Then water elasticity of linguini production is as

    		•
  • Q : Problem on utilitarian philosophy Can

    Can someone help me in finding out the right answer from the given options. The utilitarian philosophy didn’t depend on the supposition that: (i) The greatest good for greatest number is the finest social goal. (ii) Individual utilities can be summed up to measu

    		•
  • Q : Shifting in market demand curve The

    The expectations which proposed new tariffs will be enacted which will raise the future prices and accessibility of digital cameras will: (1) Not affect the present demand for cameras. (2) Cause consumers to move up all along their market demand curve. (3) Not influen

    		•
  • Q : Problem on Paradox of Value I have a

    I have a problem in economics on Problem on Paradox of Value. Please help me in the following question. Since diamonds are much expensive as relative to water, the: (i) Fundamental needs of people don’t comprise water. (ii) Consumer surplus from consuming the di

    		•
  • Q : Operation in the short run of fixed

    The curves demonstrated in this figure reflect that: (i) operation in the short run since fixed costs can be measured in the graph. (ii) a disequilibrium that will force some competitors to exit this market. (iii) how firms innovate new technologies in response to pro

    		•