Calculate the present value of 1000 zero-coupon bond with 5

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Question 1:

Calculate the present value of $1,000 zero-coupon bond with 5 years to maturity if the required annual interest rate is 6%.

Question 2

Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table:

Years to Maturity Discount Rate Current Price
_____________________________________________
3 5
3 7
6 7
9 7
9 9
_____________________________________________


What relationship do you observe between yield to maturity and the current market value?

Years to Maturity Yield to Maturity Current Price
__________________________________________________________________
3 5
3 7
6 7
9 5
9 9
__________________________________________________________________

Reference no: EM13478535

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