A Zero Coupon Bond Is a Bond That Pays No

A zero coupon bond is a bond that pays no return until it comes due and then pays the holder of the bond its face value.Suppose that a $2,000 zero coupon bond will come due on January 1, 2020.If the interest rate is 5% and will remain 5% forever, what will this bond be worth on January 1, 2005?

A) $2,000/0.5
B) $2,000/0.05¹⁵
C) $2,000 + 2,000/15
D) $2,000/1.05¹⁵
E) None of the above.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free