<span>b) The nominal interest rate falls as the country's price level falls.
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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.
The United States is a major trader in <u>SERVICES</u>, the fastest growing segment of world trade.
<h3 /><h3>What does the U.S. trade?</h3>
There are several things that the United States trades with other countries and one of the main ones is services.
Services are the fastest growing segment when it comes to world trade and the United States is a heavy trader of services. Some prominent services include Video and Music media.
Options for this question are:
- A. commodities.
- B. automobiles.
- C. food and beverage
- D. Services
Find out more on trading services at brainly.com/question/5376094
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Answer and Explanation:
Answer and explanation attached
Though I have no experience in business, I would say it is True.
