What would happen to the price of the 10-year zero-coupon


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A 2.375%, 30-year bond with semi-annual coupon payments and a face value of $10,000 has just been sold at par.

1. If a 10-year zero-coupon bond were marketed at a return of 2.375% ), the price of a $10,000 face value bond is?

2. If the required return increases by 1.0% per year, compounded semiannually, the new price of the coupon bond is?

3. What would happen to the price of the 10-year zero-coupon bond with a face value of $10,000 given this change in the interest rate?

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Financial Management: What would happen to the price of the 10-year zero-coupon
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