1. The calculation of the interest rates and bond prices are as follows:
Bond Price Interest Yield, % Calculations
$ 8,000 10.00% 10% ($800/$8,000 x 100)
$ 9,000 8.90% $9,000 ($800/8.9%)
$10,000 8.00% 8% ($800/$10,000 x 100)
$12,903
6.2% $12,903 ($800/6.2%)
2. The generalization drawn from the completed table is <em>A. </em><em>Bond price</em><em> and </em><em>interest rate</em><em> are </em><u><em>inversely related.</em></u>
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The generalization about the <em>relationship between bond price and interest rate</em> is not that bond price and interest rate:
- <em>B. Are not related
</em>
- <em>C. Are directly related
</em>
- <em>D. No sufficient data for generalization.</em>
<em />
Thus, bond price and interest rate are<em> </em><u><em>inversely related</em></u><u>.</u>
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