Answers
Considering a 30 year 0 coupon bond, please note that the price of the bond will change as the interest rates fall from 8% to 5%. The price will increase as a result of this movement.
Assuming the par value of the bond to be USD 1 million. We calculate the present value of 1 mn to be received at the end of 30 years for both scenarios - 8% YTM and 5% YTM
Price@ 8% = 
%)^30 = USD 99,377 Answer
Price@ 5% = 
%)^30 = USD 231,377 Answer
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