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An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for 1 year bonds can be estimated using the
| An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for 1 year bonds can be estimated using the following equations: | ||||||||||||||
| Demand: Price = (-0.5)*Quantity + 930 | ||||||||||||||
| Supply: Price = Quantity + 500 | ||||||||||||||
| Assume the face of the bond is $1,000. | ||||||||||||||
| 1. What is the expected equilibrium price and quantity of bonds in this market to 4 decimal places? | Price | $ | ||||||||||||
| Quantity | ||||||||||||||
| 2. Given your answer to part (a), which is the expected interest rate in this market as a percentage to 2 decimal places? | ||||||||||||||
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Advances In Financial Machine Learning
Authors: Marcos Lopez De Prado
1st Edition
1119482089, 978-1119482086
