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yan [13]
3 years ago
7

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be G

roup of answer choices equal to $500,000 greater than $500,000 less than $500,000 greater than or less than $500,000, depending on the maturity date of the bonds
Business
1 answer:
Mashcka [7]3 years ago
5 0

Answer:

less than $500,000

Explanation:

Based on the information given Bonds issued that has a CONTRACT RATE of 6% which is LESSER THAN the MARKET INTEREST RATE of 7% will lead to a DISCOUNT because the PRICE OF THE BONDS of 6% is LESSER THAN the FACE VALUE of the bonds which therefore means that the PRICE OF THE BONDS will be LESS THAN its face value of the amount of $500,000.

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Answer:

<h2>An expansionary monetary policy by the Federal Reserve would lead to an <u>increase </u> in the demand for US assets and a <u>depreciation</u> in the value of US dollars.Hence the correct answer is option D) or increase;depreciate.</h2>

Explanation:

An expansionary monetary policy commonly entails expansion of money supply thereby reducing the eventual interest rate in order to boost or stabilize the Aggregate Demand(AD) and overall output level or GDP in the economy.Now,as the domestic interest would fall in US due to the expansionary speculations and inflationary indications(increase in money supply),it would consequently lower the value of the US dollars relative to other foreign currencies.This implies that US dollar would depreciate compared to other foreign currencies.This possibility would encourage the importers and international investor or financiers to become more attracted towards the US goods,services and financial assets thereby increasing their demands.Therefore,a depreciation of US dollars would essentially lead to an increase in the demand for US assets in the international market as depreciation of US dollars would also lower the value of US assets in the international market.

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4 years ago
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