Question
A zero-coupon bond with a face value of ₹1,000 matures
in 5 years. If the market yield is 8%, what is its present value? (PV factor for 5 years @ 8% is 0.6806)Solution
The value of a zero-coupon bond is the present value of its face value. PV = Face Value * PV Factor = ₹1,000 * 0.6806 = ₹680.60.
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