1) Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research and development at its Skynet division. Each bond will have a face value of

$1,000 and will mature in 55 years. The yield on the bond is 33%. What is the fair price for one of Cyberdyne's zero coupon bonds?

The fair price for one of Cyberdyne's zero coupon bonds is?

$.

2) Suppose you purchase a zero coupon bond with a face value of $1,000, maturing in 21 years, for $213.20. Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the bond's life?

The implicit interest in the first year of the bond's life is?

$.

3) What is the percentage change in price for a zero coupon bond if the yield changes from 8.5% to 6.5%? The bond has a face value of $1,000 and it matures in 10 years. Use the price determined from the first yield, 8.58.5%, as the base in the percentage calculation. The percentage change in the bond price if the yield changes from 8.5% to 6.5% is?

? %