Question

1)  

Cyberdyne Systems is issuing a series of zero coupon bonds to raise​ $500M to fund research and development at its Skynet division. Each bond will have a face value of ​$1,000 and will mature in 17 years. The yield on the bond is

4.5​%.

What is the fair price for one of​ Cyberdyne's zero coupon​ bonds?

The fair price for one of​ Cyberdyne's zero coupon bonds is

​$

2)

Suppose you purchase a zero coupon bond with a face value of ​$1,000 maturing in 18 ​years, for

​$213.65. Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the​ bond's life?

The implicit interest in the first year of the​ bond's life is

3)

What is the percentage change in price for a zero coupon bond if the yield changes from 77​% to 88​%?

The bond has a face value of ​$1,000 and it matures in 12 years. Use the price determined from the first​ yield, 77​%, as the base in the percentage calculation.

The percentage change in the bond price if the yield changes from 77​% to 88​% is?

Answer 1

1.
=1000/1.045^17=473.176385445176

2.
=1000/(1+(1000/213.65)^(1/18)-1)^17-213.65=19.1278352500022

3.
=(1000/1.08^12)/(1000/1.07^12)-1=-10.562%