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a) A ten-year zero coupon bond with a face value of $1,000 is currently priced at 48.72% of the face value. Assume the bond's YTM remains unchanged throughout the bond's term to maturity. What should the bond be sold for three years from now?
b)Your company is planning to borrow $500,000 on a 25-year, 7 percent, annual payments, fully amortized term loan. What fraction of the payment made at the end of the eleventh year will represent repayment of principal?
c)You plan to buy a new HDTV. The dealer offers to sell the set to you on credit. You will have 3 months in which to pay, but the dealer says you will be charged a 15 percent interest rate; that is, the nominal rate is 15 percent, semi-annual compounding. As an alternative to buying on credit, you can borrow the funds from your bank. At what nominal bank interest rate (APR compounded monthly) should you be indifferent between the two types of credit? Use at least 6 decimal places in your calculations for this question.
d) You are offered an investment opportunity with the “guarantee” that your investment will double in 5 years. What monthly rate of return would this investment provide?