How do you cash in a zero coupon bond from 1984 with a maturity date of may 2009?
The bond has matured so if you're the owner of the bond you should have already received payment. If you haven't, contact the issuer to see if there's an error or the law firm that's handling that issuer's bankruptcy.
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Go to your local discount broker, (Schwab, Ameritrade, E*trade, Scottrade) open an account and they will cash it in or liquidate it for you. There will be a fee associated wit…h the transaction. Shop around, prices vary. If they can't (or won't) do it, have them give you the name and address of the transfer agent. You can send it to them to liquidate as well. Good luck.
A bond that does not pay interest until the point in time when itreaches maturity.
\n. \nA zero coupon bond pays no interest. Thus the market price for such a bond is always LESS than the maturity (face) value. The amount by which the bond is priced below i…ts maturity value is known as the DISCOUNT. For example, a $100 zero coupon bond maturing in one year priced to yield 10% (in simple terms) would be sold to the investor for $90.91 on the date of issue. The investor would receive no payments from the borrower until maturity, at which time the investor receives the $100 face value.\n. \n There's another form of zero-coupon bond \n. \nSome brokerages will take a regular bond with coupons and "strip" it. They'll remove the coupons and sell the corpus of the bond separately from the coupons. \n. \nA zero-coupon bond that was issued as such will normally have a really long maturity date--five to ten years isn't uncommon. You buy them as long-term investments...if you've got a child who will begin college when she's 19, you might want to buy ten-year zero-coupons that mature as the child enters each year of college.
You do not get full value.
If you purchase a zero coupon bond today for 225 and it matures at 1000 in 11 years what rate of return will you earn on that bond to the nearest 10th of 1 percent?
Po =I (PVIFA kdn) + M(PVIF kdn). = $225 = $ 1,000 (PVIF) note 1 = 0 since this is a zero coupon bond.. (PVIFkd, ) =0.317
\nJust take it to a bank.
if a bond has finite maturity or limited maturity then we must consider not only the interest rate stream but also the maturity value (face value). regards Sajida Gu…l
That would depend on the specifics of the individual bond.
If Pat pays 12485 and 52 cents for a 25000 zero coupon bond that matures in 8 years what is his annual rate of return?
9.066% annually compounded or 8.87% semi-annually compounded.
Zero coupon bonds are sold at a price well below face value. Thus, these bonds are appealing to the small investor because they can be bought far more cheaply than ordinary de…bt obligations. The discount is usually from 50 to 75 percent.
They pay no 'coupon' which is the income paid periodically. You make a return by buying at a discount. As an example, if you buy a zero coupon bond for $86.26, maturing at $1…00 over 5 years, you would earn 3% p.a.
depends on the collateral supporting the bond.
That would depend on the maturity
Zero coupon bonds do not pay interest and are therefore sold at a steep discount to face value depending on the maturity date of the bond. Due to the time value of money, the …discount on a 30 year zero coupon bond will be much greater than on a 10 year zero coupon bond. At maturity bondholders will receive the full face value of the bond which provides bondholders a return. For example, a 30 year zero coupon bond with a face value of $1,000 and sold for $500 would return a $500 profit after 30 years. Holders of zero coupon bonds can sell the bonds at any time before maturity. If an investor bought zero coupon bonds prior to a steep drop in interest rates, the value of the zero coupon bonds would increase and could be sold at a profit.
A zero coupon bond is a bond which pays no interim cashflow (i.e. coupons). We usually price on the basis of percentage of Face Value (i.e. $100). So if you expected 5% retu…rn, semi annually, over the 3 years remaining on the life of a ZC Bond, the price would be; 100/(1+Yield/frequency)^(TermXfrequency) 100/(1+5%/2)^(3X2) = $86.23 So you'd pay $86.23 now and get $100 back in 3 years. If so, then your return would be 5% s.a.
Zero coupon bonds issued by the US Treasury are issued at adiscount to face value. An investor holding zero coupon bonds ispaid the full face value when the zero coupon bond m…atures. The difference between the purchase price and the maturity value isknow as the original issue discount which represents the interestearned on the zero coupon bond. Although a zero coupon bond does not pay annual interest, aninvestor must pay taxes each year based on the imputed receipt ofincome. Since the investor is not receiving interest paymentsduring the life of the bond, taxes would be paid on interest incomenot actually received until bond maturity. Due to the yearly taxliability on imputed interest, it makes sense for most investors tohold zero coupon bonds in a tax deferred retirement account. The interest earned on zero coupon bonds issued by the US Treasuryare exempt from state and local taxes.
The advantage of buying zero-coupon bonds is that when they reach maturity, the investor then receives the full face value of the bond. These bonds became popular in the 1980…'s even though they were first released in the 1960's.