RatedrillZero-coupon bond price
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A zero-coupon bond pays $1,000 at maturity in 3 years and nothing before then. Its yield to maturity is 2%, quoted as an annual rate compounded semiannually, the bond market convention. What is its price?
What this problem teaches
A zero-coupon bond always trades below face value before maturity: the discount is the only return.
A hint if you get stuck
With no coupons the price is just the face value discounted: use y / 2 per half-year and 2 × years periods.
Try it now, free, no account needed
The first 15 tasks on Ratedrill are free. Open it on the practice page, solve it, and get instant feedback with a hint. A free account adds the worked solution; Pro adds timed mode and the certificate.
Open this problem