Assume you buy a 20-year, $1,000 par value zero-coupon bond that provides a 10 percent yield. Almost

Question:

Assume you buy a 20-year, $1,000 zero-coupon bond that provides a 10 percent yield. Almost immediately after you buy the bond, yields go down to 8 percent.
a. What will be your gain on the investment?
b. What will be your percentage gain? Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...