Question: Apple recently issued a zero coupon bond. The zero coupon bond has a face value of $1 billion and matures in six years. Assume that

Apple recently issued a zero coupon bond. The zero coupon bond has a face value of $1 billion and matures in six years. Assume that when the bonds were sold to the public, the annual market rate of interest was 3 percent.


Required:
1. Explain why an investor would buy a bond with a zero coupon (interest) rate.
2. How much did Apple receive when it issued the bonds with a face value of $1 billion?
3. How much would Apple have received if the annual market rate of interest remained at 3 percent, and the bonds matured in 10 years?

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