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What is the new equilibrium price and quantity

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The demand curve and supply curve for one-year discount bonds were estimated using the following equations:

Bd: Price = -2/5Quantity + 940

Bs: Price = Quantity + 500

Following a dramatic increase in the value of the stock market, many retirees started moving money out of the stock market and into bonds.

This resulted in a parallel shift in the demand for bonds, such that the price of bonds at all quantities increased $50.

Assuming no change in the supply equation for bonds, what is the new equilibrium price and quantity? What is the new market interest rate?

Reference no: EM131127267

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