You are a trading analyst at a financial planning firm in Sydney. In August 2021, you noticed the following data in the bond market. (a). While the yield on a 3-year bond increased over time, the yield on a 1-year bond and a 2- year bond decreases a bit. What does it imply to the yield on a 1 -year bond in 2023 ? (b). You believe that investors with different trading strategies and risk preference will stay in different markets. If you observe a sudden increase in the supply of a 1 -year bond how will it change the yield on this bond, if everything else remain unchanged?

You are a trading analyst at a financial planning firm in Sydney. In August 2021, you noticed the following data in the bond market. (a). While the yield on a 3-year bond increased over time, the yield on a 1-year bond and a 2- year bond decreases a bit. What does it imply to the yield on a 1 -year bond in 2023 ? (b). You believe that investors with different trading strategies and risk preference will stay in different markets. If you observe a sudden increase in the supply of a 1 -year bond how will it change the yield on this bond, if everything else remain unchanged?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 20P

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