PV of Cash Flows as rates change Bond Value PV of coupons PV of par Bond Value PV annuity PV of lump sum Remember,as interest rates increase,the PVs decrease So,as interest rates increase,bond prices decrease and vice versa 44 PV of Cash Flows as Rates Change n Bond Value = PV of coupons + PV of par n Bond Value = PV annuity + PV of lump sum n Remember, as interest rates increase, the PVs decrease n So, as interest rates increase, bond prices decrease and vice versa