The relation between the
Explanation of Solution
The inverse relation between the bond price and its interest rate is shown in the figure below:
According to the diagram, initially, the
Bond price: Bond price is the present value of a bond compared to its future promises of pay. It is inversely related to its interest rate.
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Chapter D Solutions
Bundle: Macroeconomics, Loose-leaf Version, 13th + MindTap Economics, 1 term (6 months) Printed Access Card
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning