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QUESTION
= $90.91 + = $1,000. PV annuity = $ 614.46 PV maturity value = 385.54 PV bond = $1,000.
... = $90.91 + = $1,000. PV annuity = $ 614.46 PV maturity value = 385.54 PV bond = $1,000.00 The calculator can calculate the present value of the annuity and maturity value in one step (always use end mode). What would happen if expected inflation rose by 3%, causing k = 13%? When kd rises, above the coupon rate, the bond"s value falls below par, so it sells at a discount. What would happen if inflation fell, and kd declined to 7%?
