Vitmix Industries Inc. is issuing a zero-coupon bond that will have a maturity of fifty years. The bond's par value is $1,000, and the current yield on similar bonds is 7.5%. What is the expected price of this bond, using the semiannual convention?
A) $25.19
B) $250.19
C) $750.00
D) $1,000.00
Answer: A
Explanation: A)
Zero coupon bond price = = = $25.19
MODE = END, P/Y = 2, C/Y = 2
INPUT 100 7.5 ? 0 -1,000
KEY N I/Y PV PMT FV
CPT 25.19
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