Assignment Solutions Spot: Question#1 - Once upon a time high prices on certain individual goods, and even general inflation in the economy, were routinely blamed on “the middleman.” The argument, quite simply, was that this superfluous layer in the supply chain served merely to increase costs, thereby pushing up prices. However, Mishkin and Eakins seem to suggest that that is not necessarily the case with financial markets. Who/what are the middlemen in financial markets and how (by how, I mean, explain the process) do they impact prices in financial markets?

Question#1 - Once upon a time high prices on certain individual goods, and even general inflation in the economy, were routinely blamed on “the middleman.” The argument, quite simply, was that this superfluous layer in the supply chain served merely to increase costs, thereby pushing up prices. However, Mishkin and Eakins seem to suggest that that is not necessarily the case with financial markets. Who/what are the middlemen in financial markets and how (by how, I mean, explain the process) do they impact prices in financial markets?

Question#2

Consider a 30 year, $100,000 bond that was sold exactly 15 years ago. Assume that it carries a face/coupon rate of 7.0%. (Note: Assume that the bond pays interest one time per year—at the end of each year. Assume also that the yield today on a security of similar risk, liquidity and maturity is 4.0%.) What is the value of that bond today?

Please explain how you arrive at your answer. If you use a financial calculator, detail the steps. If you use tables, identify the tables and tell how you applied them. If you solved with a simple Dollar Tree calculator, give the formula you used.