Thursday, September 16, 2010

Pop Quiz

What is the value of a zero coupon bond with no maturity?


Tharsan Sivapatham said...

Is that even possible? I would say it has no value since you'll never seen any money back.

Joshua Wong said...

Ding! Ding! Ding! Correct! For exactly the reasons you mentioned.

I've had some pretty interesting answers: "Face value", "Face value with a discount", etc.

If you don't get a coupon and it doesn't mature (perpetuity), then you never get any money back!

Tharsan Sivapatham said...

Sweet! Even though it has no value, it sounds like you would have no trouble finding some buyers if you issued such a bond :)