Mis304 exam 2 UofA study guide solution Macroeconomic and Global Institutions and Policy Bond Market Worksheet 1. Draw the Bond market. Be sure to label everything. Show what happens before and after a decrease in the desire of people to save rather than spend their income. a. What happens to Bond prices? ____________ b. What happens to Interest Rates? ____________ c. What happens to lending? ____________ 2. Draw the Bond market. Be sure to label everything. Show what happens before and after an increase in the ease one can buy and sell bonds. For example, with the internet, now it can all be done electronically from your home. a. What happens to Bond prices? ____________ b. What happens to Interest Rates? ____________ c. What happens to lending? ____________ 3. Interest rates are currently 2% a year. I promise to pay you $4000 in 10 years. How much should you be willing to pay for that promise today. Important: show your work. 4. Write out the equation that would allow you to determine the YTM of a 3-year coupon bond with a Face Value of 1000, a coupon rate of 3%, and a current price of 900. 5. You are confident