If a bond pays a fixed return of 500 a year and the current interest rate has risen from 5 percent to 10 percent, then the bond price must have:
a. risen from 25 to 50.
b. fallen from 50 to 25.
c. risen from 5,000 to 10,000.
d. fallen from 10,000 to 5,000.
e. risen from 1,000 to 5,000.
Question 2
An increase in demand for a product and a reduction in the costs of production would:
a. increase the equilibrium quantity and increase the equilibrium price.
b. increase the equilibrium quantity and decrease the equilibrium price.
c. increase the equilibrium quantity and cause an indeterminate change in the equilibrium price.
d. decrease the equilibrium quantity and cause an indeterminate change in the equilibrium price.
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