What would be the bond price in market equilibrium

Assignment Help Macroeconomics
Reference no: EM132600904

1. Consider a bond that promises to pay (a coupon) $50 one year from now, (a coupon) $50 two years from now, (a coupon) $50 three years from now, and (the principal) $1,200 three years from now. Let's say the market interest rate is 6% per year. Assume the bond is risk-free.

a. If the bond is offered for $1,200, should you buy the bond at this price? Explain why or why not.

b. What would be the bond price in market equilibrium?

2.Suppose the Federal Reserve (the USA central bank) increases the money supply in the USA. What would be the effect of this monetary expansion in the USA on the Canadian GDP? Specifically, explain what happens to the Canadian net exports (hint: there is more than one way that the US monetary expansion influences the Canadian net exports, and you should try to describe & explain the overall impact).

Reference no: EM132600904

Questions Cloud

Determine chernin incremental profit or loss : Gross Industries offers to buy 150 shirts with special lettering for $5 per shirt. Determine Chernin's incremental profit or loss if the Gross offer is accepted
Analyze asymmetric and symmetric encryption : In this milestone writing assignment, you will analyze asymmetric and symmetric encryption.
Discuss and analyse the pros and cons of the ifrs standards : Discuss and analyse the pros and cons of the IFRS standards, which require the use of fair value in recognition and measurement
Knowledge sharing and retention strategy : Do such tools challenge organizations on their knowledge sharing and retention strategy?
What would be the bond price in market equilibrium : 1. Consider a bond that promises to pay (a coupon) $50 one year from now, (a coupon) $50 two years from now, (a coupon) $50 three years
Effect of expansionary fiscal and monetary policy : 1. What is the main idea of the chapter on the influence of monetary and fiscal policy on aggregate demand?
Chapter on aggregate demand and aggregate supply : 1. What is the main idea of the chapter on Aggregate demand and aggregate supply?
How explain why the chairperson of the iasb believes : How Explain why the Chairperson of the IASB believes that the former accounting standard for leases did 'not reflect economic reality'.
Idea of the chapter on macroeconomics of open economy : 1. What is the main idea of the chapter on macroeconomics of open economy?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Calculate the size of labor force

Productivity often increase during economic expansions and decreasing during economic recessions. Can you think of reasons why?

  Compute the subgame perfect equilibrium

Player 1 makes the first offer of how to split a surplus of 1, followed by either acceptance or rejection of this offer by player 2. Acceptance ends the game, and the surplus is divided as agreed. If player 1's offer is rejected, player 2.

  Explain what the value means

This problem is inspired by a study of the "gender gap" in earnings in top corporate jobs [Bertrand and Hallock (2001)]. The study compares total compensation among top executives in a large set of U.S. public corpora-tions in the 1990s.

  Explain how nebraska can end up with trade

Suppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of prod..

  Find the growth rate of total factor productivity

Assume labor's share of GDP is 70% and capital's is 30%, real GDP is growing at a rate of 4 percent a year, the labor force is growing at 2 percent, and the capital stock is growing at 3%.

  What would be a plausible effect on a labour market

Trade integration may have an impact on labour markets. What would be a plausible effect on a labour market with rigidities

  Eliminate trade between freeland and braveburg

Assume that Freeland could produce 8 units of X and no Y, 16 units of Y and no X, or any linear combination in between, and Braveburg could produce 32 units of X and no Y, 48 units of Y and no X, or any linear combination in between.

  Find the maximum output possible

Does output always increase with input use? If so, prove it. If not, find the maximum output possible.

  Motivate managers to make decisions

Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

  Identify and describe the keynesian actions

Identify and describe the Keynesian actions. Theorize how the outcome might have differed if the government had followed a more classical economic plan.

  Factors that have driven growth in real gdp

Identify and analyze the factors that have driven growth in real GDP - Identify any recent events or changes that have caused an increase in GDP but not a correlating increase in our nation's standard of living.

  Discuss the debate over the rate of increase in productivity

Discuss the debate over the rate of increase in productivity in the economy and the impact that productivity changes have on real GDP and the price level

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