What would be the value of the zero-coupon rate bond

Reference no: EM13278926

A 20-year, $1,000 par value zero-coupon rate bond is to be issued to yield 11 percent. a. What should be the initial price of the bond? (Take the present value of $1,000 for 20 years at 11 percent, using Appendix B.) b. If immediately upon issue, interest rates dropped to 9 percent, what would be the value of the zero-coupon rate bond? c. If immediately upon issue, interest rates increased to 13 percent, what would be the value of the zero-coupon rate bond?

Reference no: EM13278926

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