Which is true? Group of answer choices Typically, only highly skilled statisticians perform trend and root cause analysis. Ultim
1 answer:
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Answer:
less desirable to other investors
Explanation:
<u>Given</u>: Current fixed coupon rate 5%
Market rate of interest 5%
New Market Rate of Interest 6%
Value of a bond is inversely related to economy interest rate or the yield to maturity (YTM). Value of a bond is expressed by the following equation:
wherein, C = Coupon rate of interest
YTM = Market Rate of Interest or interest rate in the economy or investor's expectation
n= Years to maturity
RV = Redemption value
In the given case, C = YTM i.e par value bond. When ytm rises to 6%, the value of the bond shall fall making such a bond less attractive since it represents lower coupon payments than investor expectations.
Thus, now the bond would be less desirable to other investors.
Answer: Nominal GDP 2016 = $7,100
REAL GDP 2016 = $3,700
Nominal GDP 2017 = $4,500
Real GDP 2017 = $4,500
Explanation:
To calculate the Nominal and Real GDPs we use the following formulas,
Nominal GDP = Sum of (Current Year Price x Current Year Quantity)
Real GDP = Sum of (Base Year Price x Current Year Quantity)
We make the assumption that 2017 is the base year so calculating would be,
Nominal GDP, 2016 = [(7 x 600) + (70 x 20) + (300 x 5)]
= $(4200 + 1400 + 1500)
= $7,100
Remember for this we will use 2017 as the base year so we will use 2017 prices
Real GDP, 2016 = [(3 x 600) + (20 x 20) + (300 x 5)]
= $(1800 + 400 + 1500)
= $3,700
Nominal GDP, 2017 = [(3 x 400) + (20 x 90) + (300 x 5)]
= $(1200 + 1800 + 1500)
= $4,500
Now seeing as 2017 is the base year, it's nominal and real GDPs will be the same.
Real GDP, 2017 = $[(3 x 400) + (20 x 90) + (300 x 5)]
= $(1200 + 1800 + 1500)
= $4,500
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