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Finance : Bond Values

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If the British government has a consol bond outstanding paying 100 pound per year forever. Assume the current intrest rate is 4% per year. What is the value of the bond immediately after a payment is made? What is the value of the bond immediately before a payment is made?

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The solution contains step-by-step procedures and explanations on how to arrive at the answer for the bond values.

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The value of bond after payment will be equal to:

Present value after payment = Annual payment / ...

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