The interest rate on a 10 percent, 10-year zero-coupon bond with a $1,000 face value falls from
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Question:
The interest rate on a 10 percent, 10-year zero-coupon bond with a $1,000 face value falls from 8 percent to 7 percent. Which of the following is true of the value of the bond? (Round the answer to two decimal places.)
a.The present value of the bond at 8 percent is $508.34.
b.The present value of the bond at 7 percent is $463.19.
c.The maturity value of the bond at 8 percent is $508.34.
d.The maturity value of the bond at 7 percent is $508.34.
e.The present value of the bond at 7 percent is $508.34.
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