Assuming that the prevailing annual interest rate

Assignment Help Business Economics

Reference no: EM13839416

On Jan. 1, 2000, you purchased a bond that will pay $1,000 on Dec. 31 of each year from 2000 until 2019. It is now Jan. 1, 2015, and you decide that you would like to sell the bond. Assuming that the prevailing annual interest rate on that day for five-year bonds is r% (compounded annually), what would be the value (in terms of dollars as of Jan. 1, 2015) of the bond?

Reference no: EM13839416

Questions Cloud

Markets capable of fixing themselves : Do you think governments should step in and help an economy move to potential or are "markets" capable of fixing themselves? Carefully consider the impact of falling prices.

Two important policy goals of the government and the fed : Two important policy goals of the government and the Fed are to keep unemployment and inflation low, while at the same time making sure that GDP is increasing at an average of 3% per year. It is important to have the right mix of policies and that al..

What would be subsequent steps-fiscal and monetary policy : Assume that the country is in a period of high unemployment, interest rates are at almost zero, inflation is about 2% per year, and GDP growth is less than 2% per year. Make sure you include both the positive and negative effects of your actions, and..

Demonstrate again that expenditures and incomes depend : Our recent recession seems to demonstrate again that expenditures and incomes depend on each other. If markets do not self adjust, how can a decline in spending lead to a negative process that ruins an economy? (Consider referencing the "Keynesian Cr..

Assuming that the prevailing annual interest rate : On Jan. 1, 2000, you purchased a bond that will pay $1,000 on Dec. 31 of each year from 2000 until 2019. It is now Jan. 1, 2015, and you decide that you would like to sell the bond. Assuming that the prevailing annual interest rate on that day for fi..

Statement we live in mixed economy-not purely market economy : Think of a business firm you recently visited (such as Walmart, Home Depot, Red Lobster, Barnes & Noble, McDonalds, etc.). What motivated the producers of all the individual products in the store to make them and offer them for sale? How did the prod..

About transfer payments with regard to computing gdp : Which of the following statements are true about transfer payments with regard to computing GDP? Check all that apply.

Income tax return-what is economic profit : Suppose an assistant professor of economics is earning a salary of $75,000 per year. One day she quits her job, sells $100,000 worth of bonds that had been earning 5 percent per year, and uses the funds to open a bookstore. At the end of the year, sh..

Efforts to develop a strategic advantage : Should innovation activities be linked to our efforts to develop a strategic advantage or should innovation efforts be experimental with an objective of finding products or services that may be profitable at some indefinite point?

User Account

All Pages