Question: A 15 -year, ( $ 1,000 ) par value zero-coupon rate bond is to be issued to yield 8 percent. Use Appendix B for an

$A 15 -year, \$ \\$ 1,000 \$ par value zero-coupon rate$ bond is to be issued to yield 8 percent. Use Appendix B

A 15 -year, \$ \\$ 1,000 \$ par value zero-coupon rate bond is to be issued to yield 8 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What should be the initial price of the bond? Note: Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places. b. If immediately upon issue, interest rates dropped to 7 percent, what would be the value of the zerocoupon rate bond? Note: Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places. c. If immediately upon issue, interest rates increased to 11 percent, what would be the value of the zerocoupon rate bond? Note: Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places. Present value of \$ \\$ 1, \\mathrm{PV}_{I F} \$ \\[ \\mathrm{PV}=\\mathrm{FV}\\left[1 /(1+i)^{n}\ ight] \\]

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