You are considering an investment in 30-year bond issued by Moore Corporation. The bonds have no special covenants. The wall street journal reports that 1-year t bills are currently earning 2.00 percent Your broker has determined the following information about economic activity and Moore corporation bonds: real risk free rate = 0.60% default risk premium=1.90% liquidity risk premium=1.40% maturinty risk premium= 2.50%

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.