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What would be the value of the bond described in Part d if, just after it...

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Finance

What would be the value of the bond described in Part d if, justafter it had been issued, the expected inflation rate rose by 3percentage points, causing investors to require a 13% return? Wouldwe now have a discount or a premium bond?

(B- pertaining to the question above

  1. How is the value of a bond determined? What is the value of a10-year, $1,000 par value bond with a 10% annual coupon if itsrequired rate of return is 10%)

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Question 1 Rate of return become 13 which is more than coupon rate Which means investor expects higher return as compare to return provided by bonds it will reduce the    See Answer
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