Solved: 6366 involve zero-coupon bonds.A zero-coupon bond is a bond that is sold now at

Chapter 6, Problem 64

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6366 involve zero-coupon bonds.A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at the time when it matures; no interest payments are made. Zero-Coupon Bonds A childs grandparents are considering buying a $40,000 face-value, zero-coupon bond at birth so that she will have enough money for her college education 17 years later. If they want a rate of return of 8% compounded annually, what should they pay for the bond?

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