• Robert Black and Carol Alvarez are vice presidents of Western Money Management and codirectors of the companys pension fund management division. A major new client, the California League of Cities, has requested that Western present an investment seminar to the mayors of the represented cities. Black and Alvarez, who will make the presentation, have asked you to help them by answering the following questions.
• How is the value of any asset whose value is based on expected future cash flows determined?
• How is a bonds value determined?
• What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required return is 10%?