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A municipality issues a 30-year zero-coupon bond at deep discount. The bond is callable at 103. The bond is called in Year 10 when its current accreted value is $500. The bondholder will receive:________.
A) $500
B) 103% of $500
C) $1,000
D) 103% of $1,000

Respuesta :

hyderali230

Answer:

B) 103% of $500

Explanation:

The zero coupon bond is issued at deep discount value and it is callable at 103% of the value at the time of call. As the value of bond was $500 at the time when it been called. The bondholder is entitled to receive 103% of the value. So, the bondholder will receive $515 ( $500 x 103% ) at the time of call.

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