What is the same bond worth


Problem: A zero bond is a kind of bond issues by an American government that pays no interest at all, simply the capital sum at the end.

a) If interest rates are 6% what is the value today of a "zero" bond paying $10,000, ten years from now?

b) If interest rates suddenly halve to 3% a year, what is the same bond worth?

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Finance Basics: What is the same bond worth
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