| http://www.w3.org/ns/prov#value | - In this case,Pb = 10/(1+0.1) + 110/(1+0.1)2 = 100!(ii) Now, assume the market interest rate has gone up to i=12%Pb = 10/(1+0.12) + 110/(1+0.12)2 = 96.62Since the market interest rate is higher than the coupon rate, the bond is worth less.This supports our general rule: When interest rates go up, bond prices fall.(iii) If the market interest rate falls to i=8%,Pb = 10/(1+0.08) + 110/(1+0.08)2 = 103
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