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At what price would this bond provide a yield to maturity

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Reference no: EM132914118

Problem - Valuing a Zero-Coupon Bond -

a. A zero-coupon bond with a par value of $1,000 matures in 10 years. At what price would this bond provide a yield to maturity that matches the current market rate of 8 percent?

b. What happens to the price of this bond if interest rates fall to 6 percent?

c. Given the changes in the price of the bond and the interest rate described in part (b), calculate the bond price elasticity.

Reference no: EM132914118

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