Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $850. a. In the table provided below, calculate and enter either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. Instructions: Enter your answers in the gray-shaded cells. For bond prices, round your answers to the nearest hundred dollars. For interest yields, round your answers to 2 decimal places. Bond Price $ 8,500 $ 10,500 $ 11,500 Interest Yield, % 8.95 6.30 b. What generalization can you draw from the completed table? O Bond prices and interest rates are directly related. There is insufficient data to make a generalization. O Bond prices and interest rates are not related. Ⓒ Bond prices and interest rates are inversely related.
Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $850. a. In the table provided below, calculate and enter either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. Instructions: Enter your answers in the gray-shaded cells. For bond prices, round your answers to the nearest hundred dollars. For interest yields, round your answers to 2 decimal places. Bond Price $ 8,500 $ 10,500 $ 11,500 Interest Yield, % 8.95 6.30 b. What generalization can you draw from the completed table? O Bond prices and interest rates are directly related. There is insufficient data to make a generalization. O Bond prices and interest rates are not related. Ⓒ Bond prices and interest rates are inversely related.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Qd 89.
Transcribed Image Text:Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $850.
a. In the table provided below, calculate and enter either the interest rate that the bond would yield to a bond buyer at each of the
bond prices listed or the bond price at each of the interest yields shown.
Instructions: Enter your answers in the gray-shaded cells. For bond prices, round your answers to the nearest hundred dollars. For
interest yields, round your answers to 2 decimal places.
Bond Price
$ 8,500
$ 10,500
$ 11,500
Interest Yield, %
8.95
6.30
b. What generalization can you draw from the completed table?
O Bond prices and interest rates are directly related.
There is insufficient data to make a generalization.
O Bond prices and interest rates are not related.
Bond prices and interest rates are inversely related. ✔
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