Question: Valuing Bonds (Easy)
a. A firm issues a zero-coupon bond with a face value of$ l ,OOO, maturing in five years. Bonds with similar risk are currently yielding 5 percent per year. What is the value of the bond?
b. A firm issues a bond with a face value of $1,000 and a coupon rate of 5 percent per year, maturing in five years. Bonds with similar risk are currently yielding 5 percent per year. What is the value of the bond?
c. A firm issues the same bond as in part (b) but with an annual coupon rate of 4 percent per year. What is the value of the bond?