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A company plans to issue 8-year zero coupon bonds with a face value of $1000. The price is set at the amount that would give
A company plans to issue 8-year zero coupon bonds with a face value of $1000. The price is set at the amount that would give potential investors a rate of return of 7% p.a. For the following questions, round your answer to the nearest cent. Do not include $. Do not use comma separators. For example, 1234.56 would be the correct format. 1. Calculate the bond price on the issue date if we assume annual coupons would be paid by comparable risk coupon bonds. (1.5 marks) $ 2. Recalculate the bond price on the issue date if we assume that semi-annual coupons would be paid by comparable risk coupon bonds. (1.5 marks) $ (1.5 marks)
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