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Estimate the percentage price change for a 5-year $1,000 par value bond, with a 6% coupon, if the yield rises from 8% to 8.5%. Interest is paid semiannually.
Opportunity Costs
The cost of the next best alternative foregone when a decision is made to choose one option over another.
Tax
Mandatory financial charges imposed by a government on individuals and organizations to fund public expenditures.
Market Price
The current price at which a good or service can be bought or sold, determined by the balance of supply and demand in the market.
Consumer Surplus
The differential in the total price consumers are interested and capable of paying for a product or service and the actual price paid.
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