The interest rate on a 10 percent, 10-year zero-coupon bond with a $1,000 face value falls from 8 percent to 7 percent. Which of the following is true of the value of the bond?
A. The value of the bond at 8 percent is $385.54.
B. The value of the bond at 10 percent is $463.19.
C. The maturity value of the bond at 8 percent is $508.34.
D. The maturity value of the bond at 7 percent is $508.34.
E. The value of the bond at 7 percent is $508.34.
Answer: E
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