PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 11, Problem 1RQ
To determine
Explain money.
Expert Solution & Answer
Explanation of Solution
According to the trend, the principal amount of bond is $1,000, and the maturity period is 1 year, where if the current one-year interest rate is equal to the coupon rate in the financial market, then Person A will receive $1,000 for the bond. For instance, suppose the coupon rate and the current one-year rate both are 5% that is 50(5% of 1,000), then, the bond holder will receive total $1,050
If the coupon rate is greater than the current year interest rate, then the
Economics Concept Introduction
Bond: A bond is a written and signed legal promise to repay a certain sum of money on a certain date.
Coupon rate: The coupon rate is the interest rate promised when a bond is issued.
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Chapter 11 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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