If you purchase for $1,000 a bond that pays $40 annually to the holder, and then "the" (that is, the market) interest rate rises to 8 percent, the price of that bond would now be:

Generally when interest payments increases, bond prices falls

Explanation:

If you purchase for $1,000 a bond that pays $40 annually to the holder, and then "the" (that is, the market) interest rate rises to 8 percent, the price of that bond would now be the present value of the future payments

Assume that the bond will last for 3 years to maturity

Interest payments at $40 = Total of $120 for 3 years

Interest payments at $80 = Total of $240 for 3 years

The additional interest payment from the growth will adjusted against the bond value of $1000 which will then be $1000 - (240 - 120). The bond price will fall to $880

Generally when interest payments increases, bond prices falls

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi