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17) an issued coupon bond has a face value of $80 and a coupon rate of 4%, with 2 years to maturity (zero risks of

17)

an issued coupon bond has a face value of $80 and a coupon rate of 4%, with 2 years to maturity (zero risks of default)

current demand function Q=15,000/p

current supply function Q=50+2p

a)compute market equilibrium price and Yield to maturity if the bond is held until matured

b)After 365 days of holding the bond, it must be sold.

the new supply function Q=125+p.

draw graph for bond market and calculate new equilibrium price. calculate rate of capital gain and loss, and rate of return

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