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What is the present value today of the future payment

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Reference no: EM132538445

Question 1: Suppose that receive a payment of $80,000 in three years. If interest rates are 2%, then what is the present value today of the future payment?

Question 2: A simple discount bond pays $300,000 in one year. Find the yield to maturity when the price of the bond is

i. $280,000

ii. $290,000

iii. $300,000

What happens to the yield to maturity as the price of the bond increases?

Question 3: How much would investors be willing to pay for a perpetuity that that pays $10,000 per year if interest rates are 4%?

Question 4: Assuming that each class day is one year, what were the yields to maturity for Series A and Series B bonds?

Question 5: What happened to the demand for bonds between Series A and B? According to the theory of asset demand, why?

Question 6: Look at the demand schedule for Series B bonds. If 150 bonds were sold instead in the Series B bond market, what would be the equilibrium (or market-clearing) price?

Reference no: EM132538445

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