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a. A Bond has a $100 face value with a redeemable value of $115 and provides an 7% annual interest payable annually for 8 years.

a. A Bond has a $100 face value with a redeemable value of $115 and provides an 7% annual interest payable annually for 8 years. The appropriate discount rate is 6% (annual rate). What is the value of the bond?

b. Using the calculations you made in relation to the value of the Bond, analyse how Bond prices and interest rates are related.

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