A shift in the demand curve for bonds occurs when the quantity demanded changes at each given interest rate. When a shift takes place, there will be a new equilibrium value for the interest rate. Explain wealth may result in a shift in the demand for bonds.
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A:
A shift in the
interest rate. When a shift takes place, there will be a new equilibrium value for the interest rate.
Explain wealth may result in a shift in the demand for bonds.
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- A shift in the demand curve for bonds occurs when the quantity demanded changes at each given interest rate. When a shift takes place, there will be a new equilibrium value for the interest rate. Explain how risk and liquidity may result in a shift in the demand for bonds.If interest rates fall after a bond issue, the bond’s price will _____. This change will be more noticeable for _________ bonds. a. decrease ... long-term b. increase ... short-term c. decrease ... short-term d. increase ... long-termA shift in the demand curve for bonds occurs when the quantity demanded changes at each given interest rate. When a shift takes place, there will be a new equilibrium value for the interest rate. Explain how expected returns result in a shift in the demand for bonds.
- A shift in the demand curve for bonds occurs when the quantity demanded changes at each given interest rate. When a shift takes place, there will be a new equilibrium value for the interest rate. Explain how expected inflation may result in a shift in the demand for bonds.Interest-rate risk results from: a. Bond prices being fixed over the life of the bond b. Inflation being uncertain c. A mismatch between an individual's investment horizon and a bond's maturity d. The fact that most people hold bonds until they matureWhich three factors will shift the supply of bonds to the left?
- Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their funds into the bond market. What only about 30 percent of surveyed investors knew was that as bond prices rise, interest rates a. fall in reaction to the decreased demand for bonds. b. rise in reaction to the increased demand for bonds. c. fall in reaction to the increased demand for bonds. d. rise in reaction to the decreased demand for bonds.Using the demand and supply curves for bonds, explain the effect of the following on the interest rates. a. A business cycle contraction b. Low inflationary expectationBelow you will find the Demand and Supply Curves for $250,000 bonds that mature in 18 years: Qd = 400,000 – 2(P) Qs = 3(P) – 100,000 If the Fed wants to move the interest rate to 5%, what would the bond price have to change to in order to achieve this?
- Use the model of supply and demand for bonds to illustrate and explain the impact of each of the following on ( a ) equilibrium quantity of bonds ( b ) equilibrium prices and ( c ) yields . Make sure you support your answer by explaining " why " those effects occur . Be as specific as you can be . . A)Inflationary expectations in the economy fall which results in a much stronger response from bond issuers than investors B)Data shows that the real estate market is going to weakenwhen the inflation rate is expected to increase, the real cost of borrowing ______ at any given interest rate; the supply of bonds _____ and the supply curve shifts to the _____. is either rise or decline increase or decrease left or rightIf the supply of financial capital increases Interest rates will remain unchanged. Interest rates will increase. Interest rates will decrease.