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I will give a thumbs up if you can solve the 3 questions thank you Chapter 11 - Bond Prices 1. The US Treasury issues
I will give a thumbs up if you can solve the 3 questions thank you
Chapter 11 - Bond Prices 1. The US Treasury issues a $10,000 one-year bond bearing a 5% rate of interest. a) What is the income stream from the bond? b) The Federal Reserve executes contractionary monetary policy and market rates rise to 5.5%. What is the price of the bond in the secondary market? c) The FED reverses course in the face of a slowing US economy. It undertakes expansionary monetary actions and market rates fall to 4.5%. What will be the price of the bond in the secondary market at the 4.5% level? d) At the end of the year, how much will the bearer of the bond receive when it is redeemed? II. Assume a $3,000 one-year bond with a 12% rate of interest. a. What is the yield? b. If market rates rise to 15%, what is the price of the bond? If rates fall to 10% what is the price of the bond? d. At the end of the year, how much will the bearer of the bond receive when it is redeemed? C. III. Assume a $100,000 bond with an 8% rate of interest. a. What is the yield? b. If market rates rise to 15%, what is the price of the bond? If rates fall to 10% what is the price of the bond? d. At the end of the year, how much will the bearer of the bond receive when it is redeemed? CStep by Step Solution
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