3 Explain the following: (a) the relationship between a bonds value and the required rate of return;

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3 Explain the following:

(a) the relationship between a bond’s value and the required rate of return;

(b) how the value of a bond changes in relation to its time to maturity;

and

(c) why you might wish to invest in bonds with a short term to maturity rather than those with a long term to maturity.

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