The demand curve and supply curve for one-year discount bonds were estimated using the following equations: Bd:
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The demand curve and supply curve for one-year discount bonds were estimated using the following equations:
Bd: Price = -2/5Quantity + 940
Bs: Price = Quantity + 500
Following a dramatic increase in the value of the stock market, many retirees started moving money out of the stock market and into bonds. This resulted in a parallel shift in the demand for bonds, such that the price of bonds at all quantities increased $50. Assuming no change in the supply equation for bonds, what is the new equilibrium price and quantity? What is the new market interest rate?
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Related Book For
Financial Markets And Institutions
ISBN: 978-0132136839
7th Edition
Authors: Frederic S. Mishkin, Stanley G. Eakins
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