You are purchasing a 20-year, zero-coupon bond. the yield to maturity is 8.68 percent and the face value is $1,000. what is the current market price?

The answer is "$182.8".

Explanation:

yield to maturity = 8.68 % = 0.0868

face value = $1,000

time period = 20 years

We can solve this by using the formula;

P = $1000 / (1 + 0.0868/2) ²⁰ˣ²

P = $1000 / (1.0434) ⁴⁰

P = $1000/5.47

P = $182.8