For which bonds expect to pay higher interest rate


  1. For which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why.
    1. a U.S. government bond or a Brazilian government bond
    2. a U.S. government bond or a municipal bond with the same term and issued by a creditworthy municipality?
    3. a 6-month Treasury bill or a 20-year Treasury bond
    4. a Microsoft bond or a bond issued by a new recording company
  2. Identify each of the following acts as representing either saving or investment.
    1. Fred uses some of his income to buy government bonds.
    2. Julie takes some of her income and buys mutual funds.
    3. Alex purchases a new truck for his delivery business using borrowed funds.
    4. Elaine uses some of her income to buy stock in a major corporation.
    5. Henrietta hires a builder to construct a new building for her bicycle shop.
  3. Demonstrate that whether you would prefer to have $225 today or wait five years for $300 depends on the interest rate. Show your work.

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: For which bonds expect to pay higher interest rate
Reference No:- TGS0523823

Expected delivery within 24 Hours