Question

Demand and supply functions for a 1-year 20%-coupon-rate bond with a face value $200 are given as follows:

Demand:  Q=100−3PQ=100−3P

Supply:   Q=P−60Q=P−60             

(2 points) Compute current yield for this bond.

(2 points) Compute yield to maturity for this bond.

(2 points) Suppose the economy is at contraction phase. What   will happen to demand and supply curves for this bond?
Explain.​

Answer 1

Explanation:

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