# Question

A zero coupon bond has a par value of $1,000 and will mature in eight years.

a. Calculate the current price of this bond if the market yield is:

i) 7.75 percent

ii) 5.25 percent

b. In each case, calculate the percentage change in the price of the bond if the market yields rises by 1 percent.

a. Calculate the current price of this bond if the market yield is:

i) 7.75 percent

ii) 5.25 percent

b. In each case, calculate the percentage change in the price of the bond if the market yields rises by 1 percent.

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