Question: Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $800. Compute and
Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $800. Compute and enter in the spaces provided in the accompanying table either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. What generalization can be drawn from the completed table?
Bond Price Interest Yield, %
$ 8,000 ……………………………. ______
_______ …………………………… 8.9
$10,000 ……………………………. ______
$11,000 ……………………………. ______
_______ …………………………… 6.2
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