Economic

2. Suppose the government wants to borrow money to cover its budget deficit. It sells a zero- coupon bond with a face value of $1000 a year from now for $950 today. a. What is the yield (the interest rate) on that bond? b. Suppose that an hour after the government sells the bond the market interest rate changes to 10%. What is the price of the bond now? c. Based on this example, explain how bond prices and interest rates are related to each other