Calculate the pv present value of the two bonds

Reference no: EM13761397

Question:-
1) Explain how an increase in government borrowing reduces private consumption spending and investment spending.

2) Bart Simpson has a choice between two bonds-Bond A and Bond B. Both bonds have a future value of $1000. Bond A earns 4% interest anually and Bond B earns 6% interest anually and both bonds have a term to maturity of 5 years. Both bonds are discount bonds ,i.e., they don't pay coupon

a. Calculate the PV (present value) of the two bonds.

b. Which bond should Bart buy?

c. From this little example, what can you say about the relationship between bond prices and interest rates?

Reference no: EM13761397

Questions Cloud

Demonstrate your comprehension of accounting systems : The project will demonstrate your comprehension of accounting systems and your ability to effectively communicate in writing. Assume you are the owner of a small CPA practice in a major metropolitan area

What are the major foreign industries : What are the major foreign industries in which U.S. business have chosen to place direct investments? What are the major industries in the United States in which foreigners place direct investments?

Technology use to solve business problems : Write paper on Technology use to solve business problems and increase efficiency

Define the industry factors that influenced rim : Research the history of RIM, specifically with an eye toward product development. Your research should lead to answers to the following questions.

Calculate the pv present value of the two bonds : Calculate the PV present value of the two bonds and Which bond should Bart buy?

Create presentation on template on office com : Watch the slide show in Slide Show view. Note that you do not need to manually advance the slide show until most of the slides have played. Note the five rules as they are presented so that you can list them later.

Write paper comparing street car named desire play vs movie : Write a two-three pages comparing a street car named desire play vs movie.

Write a two-three page book report on ethan frome : Write a two-three page book report on ethan frome.

Website to integrate changes : Expand your design document and update your existing website to integrate changes based on instructor feedback.

User Account

All Pages