Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 15, Problem 6P
To determine
The interest rate on bond and the relationship between price and interest rate.
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Students have asked these similar questions
Suppose that the market interest rate in an economy is 7 percent and a bond promises to pay $615 after one year, $856 two years from now, and finally $1423 three years from now
The equilibrium market price of this bond is $
(Round your response to two decimal places)
If this bond were to sell for $2981 in the market,
then it is profitable
this bond from investors' perspectives.
If the price of a government bond (gilt) traded on the stock market rises above its nominal value, which of the following statement must be true?
1 -The bond's coupon falls below the yield
2 - The bond's coupon rises above the yield
3-the bond's yield rises above the coupon
4 - the bond's yield falls below the coupon
You own a zero-coupon bond that will pay 10,000 in two years. The interest rate from 2021 to
2022 is 0.09 and the interest rate from 2022 to 2023 is 0.03. What is the current price of this
bond? Please give your answer to two decimal places. (Hint: one must discount this bond twice:
once from 2022 to 2021; and then again from 2021 to 2020.)
Chapter 15 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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