Question: Question 5 (a) The valuation process for a bond requires a knowledge of three basic elements, what are they? (3 marks) (b) Consider a bond,

Question 5 (a) The valuation process for a bond requires a knowledge of three basic elements, what are they? (3 marks) (b) Consider a bond, maturing in 10 years and having a coupon rate of 8 percent. The par value is $1,000. Investors consider 10 percent to be an appropriate required rate of return in view of the risk level associated with this bond. What is the value of the bond? (4 marks) (c) Define the following and discuss the decision rules for each: (i) Independent projects (ii) NPV Method (iii) PI Method (iv) IRR Method (8 marks)

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