In the theory of portfolio choice, which of the following will decrease the quan
ID: 1130676 • Letter: I
Question
In the theory of portfolio choice, which of the following will decrease the quantity demanded of an asset? A. an increase in the risk of the asset relative to alternative assets O B. an increase in the liquidity of the asset relative to alternative assets C. an increase in the wealth of the buyer D. an increase in the expected return on the asset relative to alternative assets If a one-year discount bond that pays $1,000 at maturity, is held for the entire year, and the purchase price is $940, then the interest rate is 6.38 %. (Round your response to the nearest percentage) A one-year discount bond for which the owner pays $937, holds it for the entire one year, and receives $1,000 at maturity, generates an interest rate of 9 . (Round your response to the nearest one decimal place).Explanation / Answer
The face value of the bond is $1000 and we are buying it at a price of $937. At the end of the year, the bond is paying an interest amount of $63. The interest rate offered in the bond is ((63 / 937) x 100) 6.72%.
The bond is giving an interest rate of 6.72% for a year.