The Canadian government has once again decided to issue a consol( a bond with never ending interest payment and no maturity date) .The bond will pay $50 in interest each year ( at the end of the year), but it will never return the principal . The current discount rate for Canadian government bonds is 6.5%.

a. What should this consol bond sell for the market ?

b. What if the discount rate should fall to 4.5%?

b.Based on your answers what is the relationship between discount rate and bond price?

Solve the problem using a financial calculator and show each step of how you came to the answer.