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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?

To determine

The reasons for treating bonds as a risky option to buy even though pre determined payments are made based on the fixed interest rate are to be determined.

Explanation

Any investors who buy the bond will receive a fixed rate of interest which is fixed at the time of issuance. Suppose the investor has bought a bond worth $1000 at 6% .Soon he buys the bond interest rate rises to 10%...

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