What basic procedure is used to value a bond

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Problem 1. What basic procedure is used to value a bond that pays annual interest? Semiannual interest?

Problem 2. What relationship between the required return and the coupon interest rate will cause a bond to sell at a discount? At a premium? At its par value?

Problem 3. If the required return on a bond differs from its coupon interest rate, describe the behavior of the bond value over time as the bond moves toward maturity.

Problem 4. As a risk-averse investor, would you prefer bonds with short or long periods until maturity? Why?

Reference no: EM132943590

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