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The bond consists of a 10-year, 10% annuity of $60/year plus a $600 lump sum at t=10. Note: To receive full credit, show numbers /
The bond consists of a 10-year, 10% annuity of $60/year plus a $600 lump sum at t=10.
Note: To receive full credit, show numbers / formulas you used to get your answer(s).
e.(3 points) What would happen if inflation fell and r declined to 7%? Find value of bond.
pv pm fv Annual rate periods compounding mode
f.(3 points) What is the relationship between r and the value of bond? Inverse relationship
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