ets denote the price of a nonmaturing bond (called a consol) as P, The equation that indicates this price is P, where lis the annual net income the bond generates and r is the nominal market interest rate. . Suppose that a bond promises the holder $200 per year forever. The nominal market interest rate is 6 percent. Calculate the bond's current price: $ 3333. (Round your answer to the nearest whole dollar.) Calculate the bond's price, If the market interest rate increases to 12 percent $O (Round your answer to the neareat whole dollar.)

ets denote the price of a nonmaturing bond (called a consol) as P, The equation that indicates this price is P, where lis the annual net income the bond generates and r is the nominal market interest rate. . Suppose that a bond promises the holder $200 per year forever. The nominal market interest rate is 6 percent. Calculate the bond's current price: $ 3333. (Round your answer to the nearest whole dollar.) Calculate the bond's price, If the market interest rate increases to 12 percent $O (Round your answer to the neareat whole dollar.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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