What happens to the value of your bond

Assignment Help Business Economics
Reference no: EM131164486

Show your math to receive credit: Suppose that you have just bought a four-year $10,000 coupon bond with a coupon rate of 7% when the market interest rate is 7%. Immediately after you buy the bond, the market interest rate falls to 5%. What happens to the value of your bond?

At the initial interest rate of 7%, the bond’s value is:

At an interest rate of 5%, the bond’s value is:

The bond’s value (has rise/has fallen) by $____?

Reference no: EM131164486

Questions Cloud

Internal production could use either of two processes : A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two processes. If the manager anticipates an annual volume of 10,000 units, which alternative would be the bes..
Labor is the mobile factor implying that labor : Suppose Home economy produces 2 goods, Food and Cloth, using labor, land, and capital. Land is specific to the Food sector and capital is specific to the Cloth sector. Labor is the mobile factor implying that labor and land are used to produce Food; ..
Energy prices and american aggregate supply from fracking : Understand the impact on the US Aggregate Supply from a higher supply of energy and the lower energy prices that follow an increase in the supply of energy. Since energy is an input into most all production and transportation, changes in energy price..
What happens to the value of your bond : Show your math to receive credit: Suppose that you have just bought a four-year $10,000 coupon bond with a coupon rate of 7% when the market interest rate is 7%. Immediately after you buy the bond, the market interest rate falls to 5%. What happens t..
What is the dollar value of the total surplus : Given the following diagrams: Q1 = 16 bags. Q2 = 11 bags. Q3 = 23 bags. The market equilibrium price is $37 per bag. The price at point a is $85 per bag. The price at point c is $5 per bag. The price at point d is $52 per bag. The price at point e is..
Current issues surrounding social security-current policy : Current issues surrounding social security and the current policy being implemented in relationship to its impact on public finance. Also include any possible new policy discussions surrounding the topic that are related to public finance.
Nominal gdp targeting differ from real gdp targeting : How does nominal GDP targeting differ from real GDP targeting? Why is real GDP targeting the riskier of the two strategies? Currently, no major central bank closely targets the money supply. Why do you think this is the case? Still, no major central ..
Essay on the role of automatic stabilizers : Write a two-page essay on the role of automatic stabilizers. In your essay include comments on the following points: What are automatic fiscal stabilizers? How do these stabilizers stabilize real GDP in the face of AD and AS shocks?What is the role o..

Reviews

Write a Review

Business Economics Questions & Answers

  What is the firm average cost at this output

The W Company is a member of the beef industry, which is perfectly competitive. The price of a beef is $60. The firm’s total cost function is TC = 100 + 10Q + 5Q2 where TC is total cost (in dollars) and Q is hourly output. What output maximizes profi..

  Her english reflected the quality

Read the excerpt from Amy Tan’s essay “Mother Tongue.”I know this for a fact, because when I was growing up, my mother’s “limited” English limited my perception of her. I was ashamed of her English. I believed that her English reflected the quality o..

  Describe a specific tariff and ad valorem tariff

Describe a specific tariff, an ad valorem tariff, and a compound tariff. What are the advantages and disadvantages of each?

  There are n ge 3 doctors who have created a partnership in

there are n ge 3 doctors who have created a partnership. in each period each doctor decides how hard to work. let eti

  Show indifference curve that goes through that bundle

for each bundle that the consumer chooses, show the indifference curve that goes through that bundle. Make sure to label your graph carefully and accurately.

  Briefly summarize the criticism offered

Find at least one scholarly article that criticizes the goal of shareholder wealth maximization. Briefly summarize the criticism(s) offered and discuss whether you believe the criticism is valid. In particular, does the article make you question t..

  Explain how this country can gain from free trade in winter

A tropical country can produce winter coats, but there is no domestic demand for these coats. Explain how this country can gain from free trade in winter coats.

  Constant price elasticity of demand

Suppose a firm faces the demand curve which gives a constant price elasticity of demand of -2. (Lerner Index)  If the firm's marginal cost is constant at $2, what is the profit-maximizing price and quantity? If the firm's marginal cost increases to a..

  Her minimum monthly payments are loan consideration

Mary's credit card situation is out of control because she cannot afford to make her monthly payments. She has three credit cards with the following 1 loan balances and APRs: Card 1, $4,500, 19%; Card 2, $5,700, 23%; and Card 3, $3,200, 15%.

  What is the net present value of this investment

ESPN currently pays the NFL $1.1 billion per year for eight years for the right to exclusively televise Monday Night Football. What is the net present value of this investment if the parent Disnery company has an opportunity interest rate equal to it..

  What proportion of total variation in q is explained

Can you reject the null hypothesis that income does not affect quantity demanded? What proportion of total variation in Q is explained by the regression equation?

  Explain how fed use of its three tools of monetary policy

Explain how the Fed's use of its three tools of monetary policy affect supply and demand in the market for reserves and the equilibrium federal funds interest rate.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd