Unformatted text preview: 13.8 _% YTM Bond B: _ 7.1 _% 27) Are the results from the IRR function the same as those using the Goal Seek method? Circle one, kindergarten style: YES / NO 28) Chapter 5 #16 If the public believes the president’s program will be successful, interest rates will fall. The president’s announcement will lower expected inflation so that the expected return on goods decreases relative to bonds. The demand for bonds increases. For a given nominal interest rate, the lower expected inflation means the real interest rate has risen, raising the cost of borrowing so that the supply of bonds falls. These two effects in combination should cause an unambiguous FALL in the equilibrium interest rate....
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This note was uploaded on 10/17/2009 for the course EC 370 taught by Professor Staff during the Spring '08 term at Oregon.
- Spring '08