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