Question: Modifying problem #8, what if the expected inflation rate rose by 3%, so investors now require a rate of return of 13% instead of 10%.What

  1. Modifying problem #8, what if the expected inflation rate rose by 3%, so investors now require a rate of return of 13% instead of 10%.What is the new calculated value of a 10-year, $1,000 par value bond with a 10% coupon rate.Does the value of the bond increase or decrease from the original value calcualted in probelm #8?
  2. How does the equation for valuing a $1000 par value bond change if semiannual payments are made? Find the value of a 10-year, semiannual payment, 10 percent coupon bond if nominal rd = 13%.

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