Bond Auction

The Treasury Department is currently holding an open auction on bonds. Each bond has a face value of $2,500,000.

Complete parts a, b, c, d, and e

a. Suppose you pay $2,475,000 for the bond at auction. Solve for the interest rate you receive on this bond, rounding to four decimal places, if possible.

b. Suppose you pay $2,300,000 for the bond at auction. Solve for the interest rate you receive on this bond, rounding to four decimal places, if possible.

c. What is the relationship between bond prices and the corresponding interest rate?

d. The trade deficit for May 2022 was _______________________________.

e. The federal funds rate is currently set at __________________________%.