The prices of all fixed-income assets (bonds)
A) are independent of the interest rate. B) are determined by the U.S. Treasury.
C) vary directly with the interest rate. D) vary inversely with the interest rate.
D
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Complementary goods are goods
a. that are consumed jointly b. that are consumed one in place of the other c. for which demand increases when the price of its complementary goods increases d. for which demand decreases when the price of its complementary goods decreases e. that are inversely related
Chris pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Chris sells the bond. If the current one-year interest rate on government bonds is 7 percent, then the price Chris receives is:
A. less than $10,000. B. greater than $10,000. C. $700. D. $10,000.