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(b) If a perpetuity bond pays RM500 per year infinitely, at a market interest rate of 5%, calculate the price of the bond. (2 marks)
(b) If a perpetuity bond pays RM500 per year infinitely, at a market interest rate of 5%, calculate the price of the bond. (2 marks) (c) If a perpetuity bond pays RM500 per year infinitely, at a market interest rate of 6%, calculate the price of the bond. (2 marks) (d) Based on your calculations in part (b) and (c), find the relationship between price of a bond and the nominal interest rate (assuming all other factors remain unchanged). (2 marks) (e) If a Singaporean firm has a franchise operation in Malaysia, what would happen to the Singaporean firm's current profits that year if the Ringgit Malaysia were to depreciate relative to the Singaporean dollars? Explain your answer. (4 marks)
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