Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

problem: Suppose the interest rate for a one-period bond is 4%.

a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

b) What is the price of an asset paying (1.5,0,1.5)?

c) What is the price of an asset paying (0,0,3)?

d) What is the price of an asset paying (0,0,3,0,0,3,0,0,3)?

problem: Suppose the interest rate for a one-period bond is 4% between the current period and the next. Then the rate becomes 5% for ever.

a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

b) What is the price of an asset paying (1.5,0,1.5)?

c) What is the price of an asset paying (0,0,3)?

d) What is the price of an asset paying (0,0,3,0,0,3,0,0,3)?

problem: Suppose that the one-period rate is 4%. describe why a two-period rate of 6% cannot be an equilibrium when individuals expect the one-period rate to remain constant.

problem: Suppose that the one-period rate is 4% and that the two-period rate is 6%. What sort of expectation for the one-period rate next period makes this situation an equilibrium?

problem: Consider an asset paying 1 next period and 2 in two periods. Suppose that the one-period rate is 4% and that it will remain constant. Show that a price of 2.5 is not an equilibrium price for this asset.

problem: Suppose that the annual rate of interest is 4%.

(a) What is the monthly rate?

(b) Consider a 3-year lease on a car that is worth $20,000 today. The first payment on the lease is next month. After 3 years the price of the car is estimated at $15,000. What is the monthly rent?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9307

Have any Question? 


Related Questions in Microeconomics

Question from 1982 through 2000 the sampp 500 stock price

Question: From 1982 through 2000, the S&P 500 stock price index rose an average of 14.7% per year (all figures in this problem are annual averages). Over the same period, the Aaa corporate bond rate fell from 13.8% to 7. ...

Discuss transportation and logistics management policywhat

Discuss transportation and logistics management policy. What impact does policy (local, state, and/or federal) have on transportation? For example, how does policy affect a retailer in trying to get their product from a ...

Question assume that the value of the currency of country j

Question: Assume that the value of the currency of country J rises by 10% one year. Its price elasticity of imports is -0.6 and its price elasticity of exports is -0.7. Imports of raw materials and parts account for 30% ...

Question in emerging markets such as india consumers shop

Question: In emerging markets such as India, consumers shop far more frequently than in most Western countries, often daily. As a result, consumers there have many more chances to switch brands. What does this buying beh ...

Question you have been asked to calculate the current

Question: You have been asked to calculate the current balance on a loan that involves 5 equal mortgage payments of $200,000 per year (principal and interest), but the interest rate changed on the loan is variable. in ye ...

Question risk management covers many areas of an

Question: Risk management covers many areas of an organization's operations. Describe a minimum of two elements of risk management and (1) evaluate if those elements are present in your organization's risk management pro ...

Question the us legal system generally requires that each

Question: The U.S. legal system generally requires that each party to a civil dispute be responsible for its own legal fees. In England the loser pays the winner's legal fees as well as its own. Do you expect to see more ...

Question drug law enforcers can concentrate their efforts

Question: Drug law enforcers can concentrate their efforts on reducing supply or demand, removing suppliers or removing demanders. a. Assuming that your goal is to raise the price of drugs to a prohibitive level, should ...

Question two firms compete in a declining industry each

Question: Two firms compete in a declining industry. Each firm has three possible choices: 1) exit the industry immediately (and gets a payoff of O); 2) exit at the end of this quarter; 3) exit at the end of next quarter ...

Question tori is planning to buy a car the maximum payment

Question: TORI is planning to buy a car. the maximum payment she can make is $3400 per year, and she can get a car loan at her credit union for 7% interest. assume her payments will be made at the end of each year 1-4. o ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As