Answer:
The new price of the bond is $928.94
Explanation:
Initially the bond's price is equal to its par value which means the coupon rate on bond and the market interest rates are the same i.e. 6%.
Th bond's price is calculated as the sum of the present value of the annuity of interest payments by the bond and the present value of the face value of the bond that will be received at maturity. The discount rate used to calculate the present values is the market interest rate.
As the bond is a semiannual bond, we will use the semi annual coupon payment, the semi annual percentage of the annual rate of interest on market and the number of semi annual periods outstanding.
Semi annual coupon payment = 1000 * 0.06 * 6/12 = $30
Number of semiannual periods till maturity = 10 * 2 = 20 periods
New market interest rate = 6 + 1 = 7% annual
New semi annual market interest rate = 7% / 2 = 3.5%
Price of bond = 30 * [ (1 - (1+0.035)^-20) / 0.035 ] + 1000 / (1+0.035)^20
Price of bond = $928.938 rounded off to $928.94
We used the present value of annuity ordinary formula for preset value of interest payments and the normal present value of principal formula for the face value.
Answer: b. The median pay of economics majors increased more in dollar terms than any other majors in 2015.
Explanation:
Several sources have shown that Economics majors had the highest per dollar increase of all majors in 2015.
This has been put down to the need for more economists in the field as the years go by and world economics becomes more uncertain. Another key factor is the level of specialization and expertise required of economists as most entry level economists jobs require a masters at the very least.
Answer:
$2
$3.50
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
$6.75 - $4.75 = $2
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
$4.75 - $1.25 = $3.5
Answer:
sell bonds, increase discount rates and increase reserve requirements
Explanation:
The Federal Reserve’s three instruments of monetary policy are open market operations, the discount rate and reserve requirements ( Sometimes discount rate management is divided as discount and interest rate) .
Open market operations involve the buying and selling of government securities. The term “open market” means that the Fed doesn’t decide on its own which securities dealers it will do business with on a particular day. Rather, the choice emerges from an “open market” in which the various securities dealers that the Fed does business with – the primary dealers – compete on the basis of price. Open market operations are flexible, and thus, the most frequently used tool of monetary policy.
The discount rate is the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans.
Reserve requirements are the portions of deposits that banks must maintain either in their vaults or on deposit at a Federal Reserve Bank.
