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Calculate the bond yield rate % for a bond with an actual interest payment of $200 and a market
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- Calculate the bond yield rate (%) for a bond with an annual interest payment of $200 and a market price of $9,000.Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $800. Compute and enter in the spaces provided in the accompanying table either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. What generalization can be drawn from the completed table?The expected real interest rate on bond will be less than the realized real interest rate if a the actual and expected inflation rates are equal. b the actual and expected inflation rates are equal to zero. c the actual inflation rate is less than the expected inflation rate. d the actual inflation rate is larger than the expected inflation rate.
- Refer to the diagram. Given Dm and Sm, an interest rate of i3 is not sustainable because the: A) demand for bonds in the bond market will decline and the interest rate will rise. B) supply of bonds in the bond market will increase and the interest rate will decline. C) demand for bonds in the bond market will rise and the interest rate will fall. D) supply of bonds in the bond market will decline and the interest rate will rise.Over the next three years, the expected path of 1 year interest rates is 1, 2, and 1 percent, and the 1 year, 2 year, and 3 year term premia are 0, 0.2, and 0.5 percent, respectively. Using the information, the liquidity premium theory of the term structure predicts that the current interest rate on 3 year bond is ____%Over the next three years, the expected path of 1 year interest rates is 1, 2, and 1 percent, and the 1-year, 2-year, and 3- year term premia are 0, 0.2. and 0.5 percent, respectively. Using the information, if the expectations theory of the term structure is true, then your expected rate of return for buying a two-year bond today over the next two-year is ____% (round to the nearest integer).
- Assume that a bond was bought for $500 and is now sold for $450. The interest (yield) on that bond has ... Group of answer choices a. Increased b. Decreased c. Can not be determined. Need more information.Inflationary expectations in the economy increase rapidly, evoking a much stronger response from issuers of bonds than lenders of bonds. Using the model of supply and demand for bonds, illustrate and explain the impact of this increase in inflationary expectation on equilibrium bond price and interest rate.Inflationary expectations in the economy increase rapidly, evoking a much stronger response from issuers of bonds than borrowers of bonds. Using the model of supply and demand for bonds, illustrate and explain the impact of this increase in inflationary expectation on equilibrium bond price and interest rate.
- Current market conditions are as follows: spot rate (e) between dollar and pound is $1.33 = £1. The rate of return on 1-year domestic bonds (i$) is 1% and the rate of return on 1-year British bonds (i£) is 2%. What is the expected spot rate (ee) 1 year from now that eliminates any arbitrage opportunities given the current market conditions? (Round your answer to 2 decimals).Answer the question based on the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest yield = 10 percent. If the price of this bond increases to $2,500, the interest yield willA downward-sloping term structure of interest rates may be an indication of _________. Multiple Choice Issuance of bonds with longer terms to maturity. Lower expected real rate of interest. Lower expected future inflation. Higher expected real rate of interest. Higher expected future inflation.