Problems for CFA Level I - Lakehead University

3. [Zero-coupon bonds] The Null Company issued a zero-coupon bond on January 1, 2000, due December 31, 2004. The face value of the bond was $100,000. The bond was issued at an effective rate of 12% (compounded annually). (a) Calculate the cash proceeds of the bond issue. Answer: The cash proceeds are 100,000 (1.12)5 = $56,743. ................
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