Question
1) A 8-year zero coupon bond with a $1,000 face value has an interest rate of 3.4% per year. What would be the change in
1) A 8-year zero coupon bond with a $1,000 face value has an interest rate of 3.4% per year. What would be the change in the value of the bond if the 8-year interest rate were to rise by 48 basis points? (Remember: your answer needs to have a negative sign if the number is negative and should not quote in percent or basis points.) ANSWER TO 4 DECIMALS PLEASE
2) The real interest rate is 1.7%. The inflation rate is 2%. What is the NPV of a project that costs $580, and will yield the first $403 in 12 months and one more $403 in 24 months? ANSWER TO 4 DECIMALS PLEASE
Step by Step Solution
There are 3 Steps involved in it
Step: 1
1 To calculate the change in the value of the bond we can use the following formula V V r where V is ...
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Step: 2
Step: 3
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
