joejoefofana
joejoefofana
26.06.2020 • 
Business

a. What are the key features of a bond? c. How does one determine the value of any asset whose value is based on expected future cash flows? 4.What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? 5.What would happen to the bond’s value if inflation fell and declined to 7%? Would we now have a premium or a discount bond? 6.What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)

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