The following effects are likely to occur in the Bond Market if there is an Economic Expansion, EXCEPT: Total Demand for Bonds will expand O Total Supply of Bonds will expand O Price per Bond will decrease O Return on Bonds will decrease pact Money DoNds.
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- The demand curve and supply curve for one‐year discount bonds with a face value of R1,000 are represented by the following equations (round your responses‐quantity and price to the nearest whole number and the interest rate to two decimal places where applicable). Bd: P = −0.6 * Q + 1200 Bs: P = Q + 800 Where Bd, Bs , P and Q are bond demand, bond supply, price and quantity respectively. Calculate the expected equilibrium price and quantity of bonds in this market and what is the expected interest rate in this market?The demand curve and supply curve for one-year discount bonds were estimated using the following equations:Bd : Price = - 2/5 Quantity + 990Bs : Price = Quantity + 500As the stock market continued to rise, the Federal Reserve felt the need to increase the interest rates. As a result, the new market interest rate increased to 19.65%, but the equilibrium quantity remained unchanged. What are the new demand and supply equations? Assume parallel shifts in the equations.An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for 1 year bonds can be estimated using the following equations:Demand: Price = (-0.5)*Quantity + 930Supply: Price = Quantity + 500Assume the face of the bond is $1,000.1. What is the expected equilibrium price and quantity of bonds in this market to 4 decimal places? Price$ Quantity 2. Given your answer to part (a), which is
- The demand curve and supply curve for one-year discountbonds with a face value of $1,000 are represented by thefollowing equations:Bd: Price = -0.8 * Quantity + 1100Bs: Price = Quantity + 680a. What is the expected equilibrium price and quantityof bonds in this market?b. Given your answer to part (a), what is the expectedinterest rate in this marketE3 The demand curve and supply curve for one-year discount bonds were estimated using the following equations: Bd Price=-2/5Quantity+990 Bs Price=Quantity+500 As the stock market continued to rise, the Federal Reserve felt the need to increase the interest rates. As a result, the new market interest rate increased to 19.65%, but the equilibrium quantity remained unchanged. What are the new demand and supply equations? Assume parallel shifts in the equationsAssume that it is January 1, 2003. The rate of inflation is expected to be 4 percent thought 2003. However, increased government deficits and renewed vigor in the economy are then expected to push information rates higher. Investors expect the inflation rate to be 5 percent in 2004, 6 per percent cent in 2005, and 7 percent in 2006. The real risk-free rate, k*, is expected to remain at 2 percent over the next 5years. Assume that on maturity risk premiums are required on bonds with 5 years of less to maturity. The current interest rate on 5 year T-bonds is 8 Percent. What is the average expected inflation rate over the next 4 year? What should be the prevailing interest rate on 4-year T-bond? What is the implied expected inflation rate in 2007, or Year 5, give that Treasury bonds which mature in the year yield 8 percent?
- Which of the following statements is correct regarding bonds? A. An increase in market interest rate would reduce a bond's yield. B. Bonds with high yields reflect high risk instruments. C. The equilibrium market price of a bond is always greater than the present value of that bond. D. A decrease in the market interest rate would result in a decrease in the present value of the bond. dont use chatgpt answerIn financial economics, __________ is a concept that refers to the reduction in investment risk that can be achieved by combining various financial assets in a portfolio. It is a fundamental element of modern portfolio theory. A) DiversificationB) ArbitrageC) LeverageD) SpeculationThe demand curve and supply curve for one‐year discount bonds with a face value of R1,050 are represented by the following equations Bd:Price=−0.8*Quanity + 1160 Bs:Price=Quantity+630 Suppose that, because of monetary policy actions, the Reserve Bank sells 90 bonds that it holds. Assume that bond demand and money demand are held constant. Calculate the effect on the bond price; and quantity; and equilibrium interest rate in this market, because of the Reserve Bank’s action.
- The demand curve and supply curve for one‐year discount bonds with a face value of $1,050 are represented by the following equations: Bd: Price = −0.8 * Quantity + 1160 Bs: Price = Quantity + 720 How does the Reserve Bank policy affect the bond supply equation?The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate?The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate? d) Suppose that the bond trades at premium. Is there excess demand or supply? Explain.e) There is a business cycle expansion, so both supply and demand shifts. After the shift, thenew demand curve is given by: D = 4000 + X − 2P, whereas the new supply curve is S =2P + 200. For which values of X will the interest increase/decrease? Which values of X arein line with empirical data?