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semiannual interest. However, there are some significant cons related to zero-coupon bonds as Corporate Bond 9. The difference between the Maturity amount received and the purchase price is an Income to this type of Bondholder. Zero coupon bonds generally come in maturities from one to 40 years. Mr. Tee is looking to purchase a zero-coupon bond that has a face value of \$50 and has 5 years till maturity. A zero-coupon convertible is a convertible bond issued by a corporation that pays no regular interest to bondholders. It means that Mr. A needs to pay \$ 6,301 to purchase the bond which will expect to receive \$ 10,000 on the maturity date in the next 6 years. This way the company or government doesnt have to worry about changing interest rates.

Coupon bonds provide coupons D) has more A bond's coupon rate is the percentage of its face value payable as interest each year. A bond with a coupon rate of zero, therefore, is one that pays no interest. However, this does not mean the bond yields no profit. Instead, a zero coupon bond generates a return at maturity. Example of Zero Coupon Bond Formula A 5 year zero coupon bond is issued with a face value of \$100 and a rate of 6%. Zero coupon bonds don't pay interest, but they are purchased at a steep discount and the buyer receives the These dont pay any interest or coupon, and at the time of maturity, the investor receives the face value or par This means if we pay something around \$72 (100-28) on December 1, 1996 for the \$100 coupon due on December 1, 2001, we will earn something around 30% over the period or 6% a year. B) pays interest that is tax deductible to the issuer at the time of payment. Question: A bond issue with a face amount of \$800.000 bears interest at A zero-coupon bond doesn't pay periodic interest, but instead sells at a deep discount, paying its full face value at maturity. (3 days ago) In reality, zero-coupon bonds are generally compounded semi-annually. Zero coupon bonds pay you a certain amount of money at the maturity date but do not pay you any interest in the meantime. 1. Buy \$10,000 worth of zero coupon bonds today, paying 3% interest and maturing in 2025, and you'll pay \$7,441. A purchased zero-interest bonds that have a face value of 10,000 and will be matured in 6 years. An example is a months, the investor is paid an interest dividend of .055 (20,000) 2 = \$550, federal income tax free, and at maturity receives \$20,000. Introduction.