Question

1.Fill in the table below for the following zero-coupon bonds, all of which have par values of $1,000. Use semi-annual periods.

Price				Maturity (semi-annual periods)			Semi-Annual Period Rates
$					20		4.60		%
$					20		3.10		%
$

2.Consider a zero-coupon bond with an expect return of 5.5%, 15 years to maturity and a par-value of $1,000. (Assume annual compounding)

a. Find the bond's price today..

b. What is the value of the bond next year if interest rates increase to 6.4%?

3. An investor spends 32,947.489 on the purchase of several zero-coupon bonds. How much money will the investor have when the bonds mature in 27 years, if the yield (return) on the bonds is 4%? (Annual Bonds).

How many bonds did the investor purchase if the par-value of the bonds are $1,000?

Answer 1