Author Question: You buy a bond for 1,000 from the federal government, which guarantees that you will receive 70 a ... (Read 30 times)

maegan_martin · **on:** Jun 30, 2018

You buy a bond for 1,000 from the federal government, which guarantees that you will receive 70 a year forever. Thus, 7 percent was the market rate of interest when you bought the bond. Suppose that immediately after you buy the bond, the market rate of interest goes to 10 percent. The market value of your bond
a. could be more or less than 1,000
b. will be less than 1,000
c. will be more than 1,000
d. will remain unchanged
e. will be 1,000

Question 2

If the exchange rate changes from 20 cents per franc to 18 cents per franc, the U.S. dollar has
a. appreciated, since its value has increased
b. appreciated, since its value has declined
c. depreciated, making French goods more expensive in U.S. dollars
d. depreciated, since its value has declined
e. depreciated, since its value has increased