What is the total amount of interest

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Question - A company (Rating AAA) wants to issue a zero-coupon bond with a par value of 100 Euro and a time to a maturity of 28 years and 270 days. The yield of comparable securities in the market is currently 3%. g) Determine the issuing price. h) After 4 years the yield for comparable zero-coupon bonds in the market is 5%. Determine the price of the zero-coupon bond after 4 years. i) What is the average rate of return an investor can realize if he/she bought the zero-coupon bond at the issuing price and sold it 4 years later when the yield is 5%? j) Name at least five considerable risks that are connected with an investment in zero-coupon bonds. k) What would be the issue price if the company had a rating of BB? Give reasons for your answer!

What is the total amount of interest the company has to if it issued 2 million bonds? Assume the company goes bankrupt after 3 years. What would an investor with an investment horizon of 5 years lose if he bought the bond at the issue date?

Reference no: EM132811763

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