You hold a two-period bond that pays a coupon  at the end of each period. The interest rate is expected to be for each of these periods. What is the price of the bond today?

Q: rates affect business? Consumers?

A: Market interest rate plays extremely essential part in the business and customer spending in light…

Q: Suppose that you saved $4,700 at the beginning of the year and that at the end of the year your…

A: Present value is the value of investment in today's dollar.  Future value is the value of investment…

Q: Is it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?

A: Yes, it is possible for a one-year coupon bond to have a negative nominal interest rate as long as…

Q: Your paycheque for the year is higher this year than last year. Does that mean that your real income…

A: In an economy, a paycheque refers to the amount of compensation a worker gets in terms of money when…

Q: What is an interest rate future? How can they be used to reduce interest rate risk by a borrower?

A: An interest rate future is a financial derivative that permits openness to changes in interest…

Q: Would a dollar tomorrow be worth more to you today when the interest rate is 20% or 10%?

A: Given the interest rates are 20% and 10%.

Q: Suppose you buy a house for $250,000. One year later, the market price for the house has fallen to…

A: Return on Investment: The return on investment is the benefit gained by the investor from making an…

Q: Suppose you buy a big-screen TV with $1,000 down and $500 per year for the next two years. If the…

A: A person buy a big-screen TV with $1,000 down and $500 per year for the next two years. If the…

Q: what happens when interest rate rises?

A: In an economy interest rate plays an important role to determine economic growth and inflation rate.…

Q: How to find the effective interest rate of a bond

A: An effective interest rate of an investment is the real return on a the interest-paying investment…

Q: Greg wants to have $50 000 in five years. He has $20 000 today to invest. The bank is offering…

A: Interest rate per quarter (i) can be calculated as follows. ...

Q: You decide to purchase a new home and need a $80,000 mortgage. You take out a loan from the bank…

A:

Q: what happens if consumers expect future interest rates to fall?

A: An interest rate is the amount of money a lender charges a borrower for the use of money, expressed…

Q: What might cause interest rates to be low one year and high the next?

A: Interest rates are best thought of as the "cost of money." If a borrower wishes to spend more money…

Q: What are the different types of investmen

A: Investment is the new expenditure on physical assets such as machines, buildings, tools and…

Q: Why is it important to begin saving for the future at a young age? o to make it so you can blow all…

A: Savings is that part of income which is not consumed and kept aside for use in the future.

Q: Your paycheck for the year is higher this year than last year. Does that mean that your real income…

A: Difference between the Nominal income and Real income is important to understand and compare current…

Q: What causes the yield on a discount bond to exceed the coupon rate on a bond?

A: The markets are the place where the buyers of the goods, services, and products tend to meet and…

Q: What does the interest rate you determine represent?

A: The interest is a specific percentage of the principal amount that is lent, borrowed, or deposited…

Q: You buy a bond that has an annual interest rate of 2 percent and a coupon of $4. What is the price…

A: Given information: The annual interest rate is 2 percent The coupon on the bond is $4 There is an…

Q: What is the relationship between interest rates and business investment?

A: To determine the relationship between interest rates and investments.

Q: What is a bond?

A: Bonds are fixed income securities and acts as a loan to a borrower. It is a kind of contractual…

Q: How is an Effective Interest Rate calculated?

A: The effective rate of interest is an important concept in economics.  The effective rate of interest…

Q: What does the interest rate measure?

A: Market interest rate refers to the interest rate that the lenders expect or demands from the…

Q: many people think that the interest rate on a bond tells them all they need to know about how well…

A: The markets in a nation tend to operate upon the basis of the demand side factors, and the supply…

Q: The price of a bond is.

A: Bond price is the present discounted value of future cash stream generated by a bond.