Question 1:
Calculate the present value of $1,000 zero-coupon bond with 5 years to maturity if the required annual interest rate is 6%.
Question 2:
Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table:
Years to Maturity Discount Rate Current Price
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3 5
3 7
6 7
9 7
9 9
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What relationship do you observe between yield to maturity and the current market value?
Years to Maturity Yield to Maturity Current Price
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3 5
3 7
6 7
9 5
9 9
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