Consider a $10,000 face value Government of Canada strip bond from the issue in Table 8.3 that

Question:

Consider a $10,000 Government of Canada strip bond from the issue in Table 8.3 that matures on June 1, 2025. Assume the yield does not change as years go by.
a. What will be the bond’s value on December 1, 2016?
b. Whatwillbethebond’svalueonDecember1,2020?
c. Suppose you invest an amount equal to the answer from Part (a) at 4.08% compounded semiannually for four years. What will its value be?
d. To three-figure accuracy, why do you get the same answers for Parts (b) and (c)?
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...