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Suppose you purchase a $1000 Face-Value Zero-Coupon Bond with maturity 30 years and yield to maturity 4% quoted with ann
Posted: Wed Jul 06, 2022 6:41 pm
by answerhappygod
- Suppose You Purchase A 1000 Face Value Zero Coupon Bond With Maturity 30 Years And Yield To Maturity 4 Quoted With Ann 1 (14.14 KiB) Viewed 21 times
Suppose you purchase a $1000 Face-Value Zero-Coupon Bond with maturity 30 years and yield to maturity 4% quoted with annual compounding. a) Show the bond cash flows on a time line and compute the current price of the bond b) Draw a graph to illustrate how the price of this bond will change as it gets closer to maturity -Price (on y axis) vs Time (on x axis). c) Why is a zero-coupon bond more sensitive to interest rate changes than similar coupon bearing bonds (2 or 3 sentences)?