Suppose you purchase a $1,000 bond that bears an interest rate of 10 percent. What will happen if the interest rate goes to 20 percent?

a. The market price of the bond will increase to $2000.
b. The market price of the bond will drop to $500.
c. The return on the bond will double.
d. The return on the bond will halve.

b

Economics

You might also like to view...

Why did the U.S. government use rationing for some foods and consumer goods during World War II?

a. to guarantee each civilian a minimum standard of living in wartime b. to keep sellers from raising prices on necessary goods c. to earn more money to support the military d. because the English government had also declared rationing

Economics

Consider two people, Sandy Smith, who earns $25,000 . and Gary Carver, who earns $50,000 . If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent, then Gary pays:

a. $10,000 in taxes and Sandy pays $5,000 in taxes. b. $10,000 in taxes and Sandy pays $10,000 in taxes. c. $15,000 in taxes and Sandy pays $5,000 in taxes. d. $15,000 in taxes and Sandy pays $10,000 in taxes. e. $17,000 in taxes and Sandy pays $5,000 in taxes.

Economics