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Consider a bond that costs $1,000 and pays an $80 interest payment each year. Instructions: In parts a and b, enter your answers as a
Consider a bond that costs $1,000 and pays an $80 interest payment each year. Instructions: In parts a and b, enter your answers as a whole number. In part c, round your answer to one decimal place. a. What is the yield for this bond? b. Suppose the price of the bond changes to $800. What is the yield for this bond? c. Now suppose the price of the bond changes to $1,200. What is the yield for this bond? d. The price of bonds and bond yields are related such that: an increase in the price of bonds will decrease the yield and a decrease in the price of bonds will decrease the yield. an increase in the price of bonds will increase the yield and a decrease in the price of bonds will decrease the yield. an increase in the price of bonds will decrease the yield and a decrease in the price of bonds will increase the yield. an increase in the price of bonds will increase the yield and a decrease in the price of bonds will increase the yield
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