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What is the bond relationship

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Reference no: EM131848808

Using the bond formula P = C [1 - 1/(1+i)n]/i  + M/(1+i)n

1. What's the bond relationship and why it works in this statement: "The value of a bond is inversely related to changes in the investor's present required rate of return (the current interest rate)." 

2. Explain what bond market condition would result the market price of a bond being less than par and what bond market condition would result in the market price of a bond being greater than par.

3. Explain what happens to the market price of a bond as the bond approaches its maturity date and why this happens.

Reference no: EM131848808

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