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Author Question: What is the relationship between interest rates and bond prices? Explain. What will be an ideal ... (Read 32 times)

Chloeellawright

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on: Jul 1, 2018
What is the relationship between interest rates and bond prices? Explain.
 
  What will be an ideal response?

Question 2

Refer to Scenario 10.4. Given the information above, what are the profit maximizing number of tickets sold and the price of tickets?
 
  A) 0, 60
  B) 20,000, 50
  C) 40,000, 40
  D) 60,000, 30
  E) 80,000, 20


sarahccccc

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Reply #1 on: Jul 1, 2018
Answer to Question 1

There is an inverse relationship between bond prices and interest rates. A bond pays a fixed sum of money each year during its life. At a higher interest rate, the present value of the future payments declines, reducing the value of the bond.

Answer to Question 2

D


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