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Question 2 What is the price of a 10 year, $1,000 face value, zero coupon bond with a 10% YTM? Assume annual compounding. 344 386

Question 2

What is the price of a 10 year, $1,000 face value, zero coupon bond with a 10% YTM?

Assume annual compounding.

344

386

512

1000

A perpetuity of $50,000 per year beginning next year offers a 10% interest rate. What is its present value?

$5,000

$50,000

$500,000

$5,000,000

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