Question Details

The price of this bond last week was 



1. "This inflation-indexed bond is structured so that the coupon payments are 4.25 percent, and the principal is adjusted as inflation changes over the life of the bond. The issue met stiff opposition." From this information, the current real interest rate is 
a) equal to 4.25% b) less than 4.25% 
c) greater than 4.25% d) greater than current inflation 
2. "Bond traders, worried about inflation, have bid long rates up above 8 percent, raising real interest rates to 5 percent." Current inflation is 
a) less than 3% b) 3% c) 5% d) more than 5% 
3. "Continued relief that the slowly growing economy is not producing significant levels of inflation moved the 30-year benchmark treasury bond to $103.28 to yield 7.30 percent versus 7.35 percent a week earlier." The price of this bond last week was 
a) less than $103.28 b) $103.28 
c) more than $103.28 d) insufficient information to tell 
4. The current price of a Treasury bill due to pay $1,000 in one year's time is $930. If the central bank announces that the money supply growth rate will jump from 6% to 8%, the interest rate should soon become about 
a) 9% b) 9.5% c) 10% d) not enough information to forecast 
5. The current price of a Treasury bill due to pay $1,000 in one year's time is $930. If the central bank announces that the money supply growth rate will jump from 6% to 8%, the price of this Treasury bill should soon 
a) fall b) remain unchanged c) rise d) not enough information to forecast



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