When the coupon rate on newly issued bonds decreases from 6% to 5%, the prices of existing bonds:
A. increase.
B. remain unchanged.
C. decrease only if the coupon rate is less than 5%.
D. decrease.
Answer: A
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Refer to Scenario 1-2. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 500 cigars?
A) sales revenue B) gross earnings C) marginal revenue D) gross profit
Do you think that prices are more or less sticky today than 50 years ago? Why?
What will be an ideal response?
If Chris pays $500 for a bond that will return $750 in one year, what is the interest rate?
a. 50 percent b. 10 percent c. 25 percent d. 250 percent e. 33 percent
Based on the model of the money market, when real income decreases, the equilibrium interest rate should:
A. stay the same. B. increase. C. decrease. D. increase to the same extent that the supply of money increases.