Question
A 10-year, $1,000 par value, zero-coupon rate bond is to be issued to yield 6 percent. Use Appendix B. (a) What should be the initial
A 10-year, $1,000 par value, zero-coupon rate bond is to be issued to yield 6 percent. Use Appendix B.
| (a) | What should be the initial price of the bond? (Round "PV Factor" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) |
| Price of the bond | $ |
| (b) | If immediately upon issue, interest rates dropped to 5 percent, what would be the value of the zero-coupon rate bond? (Round "PV Factor" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) |
| Value of the bond | $ |
| (c) | If immediately upon issue, interest rates increased to 8 percent, what would be the value of the zero-coupon rate bond? (Round "PV Factor" to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) |
| Value of the bond | $ |
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