Question: Please solve parts c - f from the question below. ( c ) What is the new price level of the bond? ( d )
Please solve parts cf from the question below.
c What is the new price level of the bond?
d Suppose that the interest rate is at and but will jump at to and stay at forever. If you are the oenly person that knows this information, what will be the bond price at at and at
e Refer to question d If you can invest only in either this bood or in cash that offers zero interest would you keep or sell the bond at At
f Refer to question d but suppose that everyone in the market knows at time t that the inferest rate will jump at to What will be the bood price at at and at
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