(answered) – 1) a) (5 points) Calculate the rate of return under the followingDescriptionSolution downloadThe QuestionPlease answer the attached questions. show all work. the sooner answered the better please.1)a) (5 points) Calculate the rate of return under the following scenario: You purchasea coupon bond with a coupon rate = 5.5% and a face value of $1,000 for $1,100.You hold the bond for one year, receive 1 coupon payment and sell the bond for $1,050. What is your rate of return? (please show all work)b) (5 points) Name 4 reasons, two from the demand side and two from the supplyside that could cause bond prices to fall like they did in part a.2) (5 points) Calculate the price of a 5 year coupon bond with a face value of $1000, acoupon rate = 4% and a yield to maturity of 3%. Please show all work.3) (10 points total) You have the following expressions for bond demand and bondsupply respectively:BD : P = 200 – .3QBS : P = 50 + .2Qa) (2 points) Solve for the equilibrium quantity and price in this bond market (pleaseshow work)b) (4 points for correct and completely labeled diagram) Draw a demand and supplydiagram and locate this initial point as point A.Now conditions change….. bond demand remains the same but bond supply changesand is now:BS : P = 30 + .2Qc) (2 points) Name and explain two reasons why bond supply could change like this.d) (2 points) Solve for the new equilibrium quantity and price in the bond market andlabel as point B. What has happened to interest rates as a result of this change inbond supply?1
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