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A zero coupon bond with a face value of $1,000 is issued with an initial price...

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Question

Finance

A zero coupon bond with a face value of $1,000 is issued with aninitial price of $497.96. The bond matures in 16 years. What is theimplicit interest earned, in dollars, for the first year of thebond's life?

Multiple Choice:

$12.98

$22.18

$11.60 X

$11.09

$6.49

Answer & Explanation Solved by verified expert
3.9 Ratings (363 Votes)
Information providedFace value future value 1000Initial price present value 49796Time 16 yearsThe    See Answer
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Transcribed Image Text

A zero coupon bond with a face value of $1,000 is issued with aninitial price of $497.96. The bond matures in 16 years. What is theimplicit interest earned, in dollars, for the first year of thebond's life?Multiple Choice:$12.98$22.18$11.60 X$11.09$6.49

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