Suppose that a bond sells for $1000 and earns $50 of interest. So the interest rate is 5 percent. Now suppose that the interest rate rises to 10 percent, what would happen to the price of the bond? -- Select an Option -- Fall to $900 Fall to $500 Rise to $1100 Rise to $1050 C

Suppose that a bond sells for $1000 and earns $50 of interest. So the interest rate is 5 percent. Now suppose that the interest rate rises to 10 percent, what would happen to the price of the bond? -- Select an Option -- Fall to $900 Fall to $500 Rise to $1100 Rise to $1050 C

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 3SQP

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Suppose that a bond sells for $1000 and earns $50 of interest. So the interest rate is
5 percent. Now suppose that the interest rate rises to 10 percent, what would
happen to the price of the bond?
-- Select an Option --
Fall to $900
Fall to $500
Rise to $1100
Rise to $1050
C

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