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What would be the value of the bond

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What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?

(Part D What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%?) don't answer this its only for reference to answer the above question.

What would happen to the bond's value if inflation fell and declined to 7%? Would we now have a premium or a discount bond?

Reference no: EM132554422

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