What is the current price of a zero-coupon bond with a par value of $25,000 and a 10 year maturity, when investors expect a return of 4.5%? What is the present value of $1,500 loan to be paid in 4 years at an interest rate of 2.5%? What happens to the demand for Gov't of Canada bonds in the following cases? (increase or decrease) There is an increase in Canadian GDP, reflecting a growth in wealth. Flooding and local supply shocks increase input prices, resulting in higher prices for final goods made in Canada. The perceived risk of stocks listed on the TSX increases. Higher government spending results in higher prices in the economy. Compare the 10Y government bond yields of two countries (https://tradingeconomics.com/bonds). Look at how the yield has changed over time (last 5 years). Have the yields of the two countries moved in tandem? Are there distinct periods of difference? What might account for some of the significant changes you observe? Which sovereign bond would you prefer to invest in? Why? (2-3 paragraphs, 200-400 words). What other information about bonds do you wish was covered in our class session? Be specific, and remember this is not an investment class, rather the goal of the class is to gain a better understanding of global financial markets.

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To calculate the price of a zerocoupon bond we can use the present value formula PV FV 1 rn Where PV is the present value FV is the future value or par value of the bond r is the required return or yi... View the full answer