Question
Consider a bond that promises to pay $100 in one year. a. What is the interest rate on the bond if its price today is
Consider a bond that promises to pay $100 in one year. a. What is the interest rate on the bond if its price today is $75? $85? $95? b. What is the relation between the price of the bond and the interest rate? c. If the interest rate is 8 per cent, what is the price of the bond today?
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Microeconomics Principles, Problems, And Policies
Authors: Campbell McConnell
21st Edition
1259915727, 9781259915727
