1) A 8-year zero coupon bond with a $1,000 face value has an interest rate of 3.4% per year. What would be the change in the value of the bond if the 8-year interest rate were to rise by 48 basis points? (Remember: your answer needs to have a negative sign if the number is negative and should not quote in percent or basis points.) ANSWER TO 4 DECIMALS PLEASE

2) The real interest rate is 1.7%. The inflation rate is 2%. What is the NPV of a project that costs $580, and will yield the first $403 in 12 months and one more $403 in 24 months? ANSWER TO 4 DECIMALS PLEASE

Answer rating: 100% (QA)

1 To calculate the change in the value of the bond we can use the following formula V V r where V is ... View the full answer