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

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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: 9780133780581

7th Edition

Authors: Olivier Jean Blanchard

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Question Posted: Mar 04, 2024 11:00 AM

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

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Bond Price and Interest Rate Relationship a Interest Rate based on Price 1 Price 75 To find the inte...View the full answer

Macroeconomics

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