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What is the percent value of the bond in absence

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Reference no: EM13149712

You will receive $50 interest every six months from your investment in a corporate bond. The bond will mature in five years from now and has a face value of $1000. This means that if you hold the bond until its maturity, you will continue to receive $100 interest semiannually and $1000 face value at the end of five years. (a) What is the percent value of the bond in the absence of inflation if the market interest rate is 8%? (b) What would happen to the value of the bond if the inflation rate over the next five years is expected to be 3%?

Reference no: EM13149712

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