r = 0.09 / 2 = 0.045
Price (PV) = face / (1 + r)^n
= 1,000 / 1.045^16
= 1000 / 2.02237
= $494.46932, round to $494.47
What is the market price of a Zero Coupon Bond that pays $1,000 face at maturity in 8 years from now?
Current market interest rate (YTM) for such a bond is 9.0% (use semi-annual discounting)
