rate C. An investment that will pay you $2,000 in one year, another $1,500 in two years, and a third payment of $3,000 in three years. The discount rate is 4%. 4. Compute the value of the following bonds assuming a 3% discount rate (required rate of return) a. A zero-coupon bond that pays $1,000 in five years b. A bond that pays $1,000 in five years, with five annual coupon payments of $20 each C. What is the coupon rate if coupon payments are $20 per year? At what discount rate would the value of the bond be "at par" (e.g., be worth $1,000?). Explain your reasoning 5. This part of the assignment is purely conceptual with no computations required. Explain the following with references to the required readings: a. What is likely to happen to interest rates if the rate of inflation suddenly increases? b. Suppose there are two bonds each with coupon payments of $50. The first bond pays $1,000 in five years, and the other one pays $1,000 in ten years. If interest rates increased, would the value of the bonds increase or decrease? Which of the two bonds would have their value change more after the increase in interest rates? Explain your reasoning. Assignment Expectations