Homework Help: macro ec

Posted by Jennifer on Friday, March 2, 2007 at 1:26am.

does anyone know how rising inflation rates would effect the price of bonds?

Take a shot, and think it through. Hint: bonds typically have a fixed face value (e.g., $1000) and a fixed interest payment schedule (e.g., 6% of the face value per year), and a fixed maturity date (e.g., 10 years).

So, if there was zero inflation, how much would you pay for a bond that paid $60 per year for 10 years and $1000 at maturity? How much would you pay if you expected 3% inflation?

No one has answered this question yet.

Answer this Question

Related Questions

Economics - Describe three specific measures the government can use to access ...
Finance - Which of the following events would make it more likely that a company...
finance (higher interest rate) - A higher interest rate (discount rate) would? A...
Econ - What effect do lifting of price controls have on inflation in the long ...
SCIENCE - Please see if I have the right answer. The three atoms in a water ...
Finance - Rainier Bros. has 12.0% semiannual coupon bonds outstanding that ...
Finance - Rainier Bros. has 12.0% semiannual coupon bonds outstanding that ...
Chemistry - How many pi bonds and sigma bonds are in ritalin molecule? I counted...
Chemistry - How many pi bonds and sigma bonds are in ritalin. I counted 4 pi ...
Chemistry - How many pi bonds and sigma bonds are in ritalin. I counted 4 pi ...

For Further Reading

First Name:
School Subject:
Answer: