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1. Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5%. For a face value of $1000, what is the present
1. Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5%. For a face value of $1000, what is the present value i.e. the price of this zero-coupon bonds?
a. If the bonds yield to maturity remains at 5%, what will its price be five years later?
b. If you purchased the bond at the initial price and sold it 5 years later, what would the rate of return on your investment be?
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