Refer to Figure 4-4. What is the value of producer surplus at the equilibrium price of $15?

A consol bond promises to pay $1000 each year, forever, starting next year. If the nominal interest rate is 5%, the present discounted value of this consol is

A) $900.00. B) $995.00. C) $2,500.00. D) $20,000.00. E) $25,000.00.

Suppose that a bond is purchased at a discount (meaning that it is sold for less than face value). Could the yield to maturity ever be less than the coupon rate? Could the holding period return be less than the coupon rate? Explain.

What will be an ideal response?