Thursday
March 26, 2015

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?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Finance - As an investor, you are considering an investment in the bonds of the ...
Finance - CC company's bonds mature in 10 years and have a par value of $1000 ...
social studies - Treasury inflation protection bonds pay: fixed interest plus an...
math - If a company issues bonds with a face value of $1000, a coupon rate of 7...
accounting - 1. If market interest rates are higher than the rate offered on the...
ACCOUNTING - Posted by dakota on Tuesday, August 13, 2013 at 2:03am. 1. If ...
finance - Which of the following statements is CORRECT? (Points: 4) Junk bonds ...
business - A loan of face value $30,000,000 is issued in bonds each face value $...
finance - Which of the following statements is CORRECT? (Points: 4) Junk bonds ...
Math 201 ( Algebra) - A student has a number of $40 dollar and $80 dollar ...

Members