Business, 23.02.2021 03:10 jkemail19

Perpetuities. The Canadian Government has once again decided to issue a consol (a bond with a never-ending interest payment and no maturity date). The bond will pay $ in interest each year (at the end of the year), but it will never return the principal. The current discount rate for Canadian government bonds is %. What should this consol bond sell for in the market? What if the interest rate should fall to %? Rise to %? Why does the price go up when interest rates fall? Why does the price go down when interest rates rise? If the current discount rate for Canadian government bonds is %, what should this bond sell for in the market?

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Perpetuities. The Canadian Government has once again decided to issue a consol (a bond with a neve...

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