Value zero-coupon rate bond

Assignment Help Financial Management

Reference no: EM132018763

A 10-year, $1,000 par value zero-coupon rate bond is to be issued to yield 7 percent.

a. What should be the initial price of the bond?

b. If immediately upon issue, interest rates dropped to 6 percent, what would be the value of the zero-coupon rate bond?

c. If immediately upon issue, interest rates increased to 9 percent, what would be the value of the zero-coupon rate bond?

Reference no: EM132018763

Questions Cloud

What other kinds of privileges exist in american society : What other kinds of privileges exist in American society, such as male, wealth, beautify, stature, education, last name? How do they provide privilege?

Describe the three forms of the efficient markets hypothesis : The Efficient Market Hypothesis has three forms. Please name and describe the three forms of the Efficient Markets Hypothesis.

Industries has pulled off miraculous recovery : Phoenix Industries has pulled off a miraculous recovery. If the firm’s investors expect to earn a return of 15% on this stock, what must be its price?

The florida investment fund buys bonds : The Florida Investment Fund buys bonds of the Gator Corporation through a broker.

Value zero-coupon rate bond : A 10-year, $1,000 par value zero-coupon rate bond is to be issued to yield 7 percent.

What does mutually exclusive mean : What does mutually exclusive mean?

How much did the company retained earnings increase : By how much did the company’s retained earnings increase? what was the dividend yield?

What is the profitability index for the cashflows : What is the profitability index for the cashflows if the relevant discount rate is 7 percent?

What is the beta of the market portfolio : What is the "market portfolio", AND what is the beta of the market portfolio?

User Account

All Pages