Assume that the British government issues a bond that promises to pay 100 British pounds forever.

1. This bond represents an infinite number of payments. Why is the value of this bond NOT infinite?
2. If investors discount the promised payments by 5%, what is the value of this bond?
3. If the fortunes of Britain deteriorate because of Brexit and the Pandemic and investors now believe that the promised payments are riskier than before, will the value of this bond increase/decrease/not change? [You do not need to provide a calculation; just assess whether there will be an increase/decrease/no change and, of course, state the reasons underlying your answer.]