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samualson samualson
wrote...
Posts: 2459
5 years ago
A zero coupon bond is selling for $476. The bond has a face value of $1,000 and matures in 8 years. Your friend asks you if he should buy the bond. He tells you his required return is 9 percent. Would you recommend he buy the bond or not? Explain your answer.
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
Read 61 times
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Replies
wrote...
5 years ago
 The yield to maturity on the zero coupon bond is ($1,000/$476)1/8 - 1 = 9.7%. Therefore, your friend should buy the bond.
 
samualson Author
wrote...
5 years ago
found this very helpful thank you
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