00:03
In problem 65, we want to know how much should a $10 ,000 face value zero coupon bond maturing in 10 years be sold for now if its rate of return is 4 .5 % compounded annually.
00:16
And so in the question, it tells you how much should a $10 ,000 face value bond maturing in 10 years be sold for now? so we want to know how much it would be sold for now if it was given 4 .5 % compounded annually.
00:32
And so you're going to use the formula a equals p times 1 plus r.
00:40
We don't need n since it's annually once a year to the t power.
00:46
And so in the question, it tells you that it's $10 ,000 at 4 .5%.
00:52
And so we have 10 ,000.
00:57
We want to know what we should sell it for now at 4 .5%.
01:05
And so we're going to change that to a decimal, which is going to be 0 .045.
01:13
To the t power and i believe it is a 10 year bond and so we're going to put 10 as our exponent...