| Question | Suppose a risk-free bond has a of $250,000 with a date four years from now. The bond also gives payments of $8,000 at the end of each of the next four years. a. What will this bond sell for if the risk-free lending rate in the economy is 4 percent? b. What will this bond sell for if the risk-free lending rate is 5 percent? c. What is the relationship between the bond’s price and the level of interest rates in the economy in this exercise? |
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| Subject | business-economics |
