The British government has a consol bond outstanding paying 300 per year forever. Assume the current interest

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The British government has a consol bond outstanding paying £300 per year forever.

Assume the current interest rate is 8% per year.

a. What is the value of the bond immediately after a payment is made?

b. What is the value of the bond immediately before a payment is made?

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Feb 27, 2024 03:07 AM

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The British government has a consol bond outstanding paying 300 per year forever. Assume the current interest

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This scenario deals with a perpetual bond also known as a consol bond that pays a constant annual am...View the full answer

Fundamentals Of Corporate Finance

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