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8. The Canadian government decided to issue a consol [a bond with a never-ending interest payment and no maturity date). The bond will pay $50
8. The Canadian government decided to issue a consol [a bond with a never-ending interest payment and no maturity date). The bond will pay $50 in interest each year {at the end of the year], but it will never return the principal. The current discount rate for Canadian government bonds is 6.5%. What should this consol bond sell for in the market? 'What if the interest rate should fall to 4.5%? Rise to 8.5%? Why does the price go up when interest rates fall? Why does the price go down when interest rates rise? 9. Your broker faxed to you the following information about two semiannual coupon bonds that you are considering as a potential investment. Unfortunately, your fax machine is blurring some of the items, and all you can read from the fax on the two different bonds is the following: Features IBM Coupon Bond AOL Coupon Bond Face value Iar $1,000 $1,000 Cou -on rate 9.5% Yield to maturi 7.5% Years to mm 10 Price $589.14 Fill in the missing data from the information that the broker sent
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