91影视

What is the expected equilibrium price and quantity of bonds in this market?

Given,

$$\begin{gathered} B^d:Price=-0.8脳Quantity+1100 \\ {B}^s:Price=Quantity+680 \end{gathered}$$

Now,

$$\begin{gathered} \text{Quantity}+700=-0.6脳\text{Quantity}+1,140 \\ \text{Quantity}+0.6\text{Quantity}=1,140-700 \\ 1.6\text{Quantity}=440 \\ \text{Quantity}=275 \end{gathered}$$

Equilibrium quantity of bonds is $275$.

Given,

Quantity is$\$275$

${\mathrm{B}}^{\mathrm{s}}\text{: Price}=\text{Quantity}+700$

Substitute $275$for quantity in equation $B^s$

$$\begin{gathered} price=275+700 \\ =975 \end{gathered}$$

Equilibrium price is$\$975$

Therefore the equilibrium price and quantity are$\$975and\$275$respectively.

what is the expected interest rate in this market?

Given.

Current price is $\$975$

Face value is $\$1000$

Now, Expected interest is:

$Expectedinterestrate=\frac{facevalue-currentprice}{currentprice}脳100$

Substitute the value of face value and current price

$$\begin{gathered} Expectedrate=\frac{\$1000-\$975}{\$975}脳100 \\ =2.56\% \end{gathered}$$

So, Expected interest rate is$2.56\%$