Prevailing market price of these contracts in spring

Assignment Help Business Economics

Reference no: EM13771281

Assume that in 2007 the U.S. Government issued a debt security with a purpose of consolidating all of the federal national debt. At the time of the issue, each security was priced at $15,000 and promised to pay 10% coupon rate indefinitely, just as investors in the capital markets anticipated at that time for the securities of equal risk level. Assume further, that during the recession in early spring 2009, investors in the market were willing to accept yield of barely 6.0% on these contracts, and as the U.S. economy began to recover in fall 2010, investors raised their expectation to 8.0%. Giving the above please calculate the prevailing market price of these contracts in spring 2009 and fall 2010, respectively __________.

Reference no: EM13771281

Questions Cloud

Government in regulating business ethics and business ethics : In Role of Government in Regulating Business Ethics and "Business Ethics: The Law of Rules, the authors seem to argue that overreaching laws and regulations do not facilitate ethical behavior, and indeed might have the opposite effect. Using these ar..

The real annual interest rate on this contract : If you expect the annual inflation rate to be 12 percent next year and a one-year bond has an expected annual yield of 7 percent, then the real annual interest rate on this contract is ______.

Financial management in nonprofit organizations : Discuss financial management in nonprofit organizations and write an essay that compares and contrasts the application of financial management techniques in nonprofit and for-profit organizations.

What causes of action does steve have : Steve is renting a property from Billy. One evening Steve tripped and fell down the stairs. What causes of action does Steve have? What remedies does he have for the faulty heater?

Prevailing market price of these contracts in spring : Assume that in 2007 the U.S. Government issued a debt security with a purpose of consolidating all of the federal national debt. At the time of the issue, each security was priced at $15,000 and promised to pay 10% coupon rate indefinitely, just as i..

The function of the organization : 1. The function of the organization, as well as its mission and vision. 2. Potential advantages of membership in the organization. 3. Provide resource information for new members, including contact information, membership requirements, and organizati..

Create simple reports in an oracle database : laboratory provides practice in the use of SQL commands to create simple reports in an Oracle database

Importance of marketing research in the development : Justify the importance of marketing research in the development of kudler fine food's marketing strategy and tactics. Identify the areas where additional market research is needed;

Build composite picture by demonstrating ancient heroicmodel : Build your composite picture by demonstrating the ancient heroic model is used to develop a character in a modern movie.

User Account

All Pages