Suppose a bond with no expiration date has a face value of $10,000 and annually pays $800 in fixed interest. 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. What generalization can you draw from the completed table? LO16.1 Bond Price Interest Yield, % $ 8,000 8.9 $10,000 $11,000 6.2
Suppose a bond with no expiration date has a face value of $10,000 and annually pays $800 in fixed interest. 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. What generalization can you draw from the completed table? LO16.1 Bond Price Interest Yield, % $ 8,000 8.9 $10,000 $11,000 6.2
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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