Question

If you own a zero coupon bond that is that will pay $100,000 in 5 years and market interest rates for similar

bonds fall from 8% to 6%, what happens to the value of your bond?

The value will increase by $13,110.25

The value will decrease by $13,110.25

The value will not change

The value will decrease by $6,667.50

The value will increase by $6,667.50

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