MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
Question
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Chapter 13, Problem 4TY

a)

To determine

The interest rate when the price of Treasury bill falls to $925 , wherein its fixed face value is $1000 and interest is paid by selling at a discount.

b)

To determine

The interest rate when the price of Treasury bill falls to $975 , wherein its fixed face value is $1000 and interest is paid by selling at a discount.

c)

To determine

To Develop: An algebraic formula expressing r in terms of P , where in r is the interest rate and P is the price of the bill. It needs to be illustrated that higher the bond prices, lower will be the interest rates. The fixed face value of treasury bill is $1000 and interest is paid by selling at a discount.

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