Diane Carter is interested in buying a five-year zero-coupon bond with a face value of $1,000.

$1.49 Excluding Tax

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QUESTION:

Diane Carter is interested in buying a five-year zero-coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?


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