demand and supply curve for one-year discount bonds
with face value of S100
are represented by the following equation:
Demand for bonds: Price =-0.8*Quantity+ 1,160
Supply of bonds: Price= Quantity +720
What is the expected equilibrium price? (2%)
What is the expected interest rate in this market? (2%)
Equating Demand and Supply | ||
-0.8Q +1160 = Q + 720 | ||
1.8 Q = 440 | ||
Q = | 244.44 | |
Price = | 964.44 | |
Interest rate | 1000/964.44 - 1 | |
Interest rate | 3.69% | |
demand and supply curve for one-year discount bonds with face value of S100 are represented by...
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