Safra Republic Bank sold a 1,000-year bond Read Article 2 in appendix before solving Q.3

• The bond trades at 7.125 % YTM (with An. Comp ). Calculate the PV of $100MM in 1000 Year?
• Does an investor buying this bond believes that Safra Republic Bank will still exist in 1000 Years?
• What is duration of this bond. What happens to bonds duration if yield goes from 7.125 % to 4%
• Which financial institutions (eg, banks, pension funds, money market funds, etc) would be natural buyers of the 1000Y bond if Markets expect rates to go down,?

Article 2 The materials below are needed to solve Q3.

WSJ Oct. 7, 1997 First Ever 1,000-Year Bond Is Readied by Safra Republic . NEW YORK -- Safra Republic Holdings SA, based in Luxembourg is bringing the first-ever 1,000-year corporate bond issue to market, tapping investor hunger for higher-yielding debt securities.

NYT Oct. 8, 1997 WILL Republic National Bank still be around in 2997?

The Safra Republic issue is rated single-A1 by Moody's Investors Service and double-A-minus by Standard & Poor's, the same ratings as Republic New York.

WILL Republic National Bank still be around in 2997? It appears that bond investors are confident it will. Lehman Brothers said yesterday that it was offering $250 million in 1,000-year bonds for Safra Republic Holdings S.A., a European subsidiary of the New York bank holding company.

The bonds were sold with a coupon of and priced to yield about 92- to 94-hundredths of a percentage point more than 30-year Treasuries now yield, or about 7.21 percent.

Details: In essence, Republic sold a security that will be viewed by investors as similar to a preferred stock, which has no stated maturity date. And it is likely that banking regulators will view the bonds as equivalent to preferred stock when assessing the company's capital structure. But Republic will be able to deduct the interest payments it makes from its taxable income, as it can deduct any interest payments. Dividend payments on preferred stock are not deductible.