Problem
Taking a bond with no fixed redemption date paying interest at the rate of 5 per cent pa and a nominal price of .C100-.
(a) What is the current rate of interest if the bond has a current market value of £110?
(b) What would be your answer if the cur-rent market price of the bond was £90?
(c) What would be the market price of the bond if the current market rate of interest is 5 per cent?