The demand curve and supply curve for oneyear discount bonds

The demand curve and supply curve for one-year discount bonds with a face value of $ 1,000 are represented by the following equations: Bd: Price = - 0.6 Quantity + 1140 Bs: Price = Quantity + 700 a. Draw the Supply and Demand graphs for this bond. What is the expected equilibrium price and quantity of bonds in this market? b. Given your answer to part (a), what is the expected interest rate in this market?

. The demand curve and supply curve for one-year discount bonds with a face value of $1,000 are represented by the following equations: Bd : Bs : P = 0.6Q + 1140 P = Q + 700 (a) What is the expected equilibrium price (P ) and quantity (Q ) of bonds in this market? Answer: Bd = Bs 0.6Q + 1140 = Q + 700 Q = 275 P = Q + 700 P = 975 2 EC 370: ========================================= \\, what is the expected interest rate in this market? Answer: 975 = 1000 i = 0.025 = 2.5%

The demand curve and supply curve for oneyear discount bonds

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