Consider a bond that promises to pay ($ 100) in one year. a. What is the interest

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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 $8 \%$, what is the price of the bond today?

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Macroeconomics

ISBN: 9781292160504

7th Global Edition

Authors: Olivier J. Blanchard

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Question Posted: Feb 29, 2024 03:01 AM

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Consider a bond that promises to pay ($ 100) in one year. a. What is the interest

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Bond Pricing and Interest Rates a Interest Rate for Different Prices We can use the bond pricing for...View the full answer

Macroeconomics

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