(a) What should be the initial price of the bond? Take the present value of $1,000 to...
Question:
(b) If immediately upon issue, interest rates dropped to 8 percent, what would be the value of the zero-coupon rate bond?
(c) If immediately upon issue, interest rates increased to 12 percent, what would be the value of the zero-coupon rate bond?
A 15-year $1,000 par value bond Zero-coupon bond values
A 15-year, $1,000 par value zero-coupon rate bond is to be issued to yield 10 percent.
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Question Posted: