Zero coupon bond
Not what you're looking for?
A 15 year, $1,000 par value zero-coupon rate bond is to be issued to yield 10%.
a. What should be the initial price of the bond? (Take the present value of $1,000 to be received after 15 years at 10 %, using Appendix B at the back of the text.)
b. If immediately upon issue, interest rates dropped to 8 %, what would be the value of the zero-coupon rate bond?
c. If immediately upon issue, interest rates increased to 12 %, what would be the value of the zero-coupon rate bond?
Purchase this Solution
Solution Summary
This solution is comprised of a detailed explanation to answer what should be the initial price of the bond.
Solution Preview
A 15 year, $1,000 par value zero-coupon rate bond is to be issued to yield 10 %.
a. What should be the initial price of the bond? (Take the present value of $1,000 to be received after 15 years at 10 %, using Appendix B at the back of the text.)
b. If immediately upon issue, interest ...
Purchase this Solution
Free BrainMass Quizzes
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Basics of corporate finance
These questions will test you on your knowledge of finance.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.