If the supply of financial capital increases Interest rates will remain unchanged. Interest rates will increase. Interest rates will decrease.
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If the supply of financial capital increases
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Interest rates will remain unchanged. |
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Interest rates will increase. |
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Interest rates will decrease. |
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- 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.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.Which of the following is a true statement? Multiple Choice ___ If interest rates fall, U.S. Treasury bonds will have decreasing values. ___ If interest rates fall, corporate bonds will have decreasing values. ___ If interest rates fall, no bonds will enjoy rising values. ___ If interest rates fall, all bonds will enjoy rising values
- In preparation for this discussion, research the issue of consumer confidence. Document one or more methods used to characterize and measure consumer confidence. Compare and contrast how confidence might be related to financial markets’ expectations of risk of a recession, similarly to interest rate spreads. Do you find consumer confidence to be a useful measure? Explain why or why not.Market interest rates are established by the banks or any financial institutions. True or false?Subprime mortgages are O mortgages issued to borrowers with flawed credit histories. government-backed mortgages issued by Fannie Mae and Freddie Mac. mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. mortgages which are bundled together by financial institutions and sold to investors.
- 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.It analyzes the responsibility of the financial system in the demand for investment versus the supply of savings.In 2008 there was an increase in uncertainty about the quality of structured financial products that were backed by mortgages (MBS - mortgaged backed securities). So that the market for these securities dried up (became less liquid). What policies the government could do to jump start (improve liquidity of) the market
- why does selling bonds by the Treasury to the financial market raise interest ratesfinancial markets that function well: a. increase the ease of converting common stocks into bonds b. reduce riskiness of most assets continually c. continually increase the liquidity of most assets d. including available information in asset pricesInvestors typically buy and sell stocks, bonds and other securities in the secondary market. Describe the different types of security markets and why they are so different.