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b) (10 points) Now draw bond supply - bond demand diagrams (side by side) with the baa corporate bond market on the left and the
b) (10 points) Now draw bond supply - bond demand diagrams (side by side) with the baa corporate bond market on the left and the 30 year US GS market on the right. Label as point A, the conditions that existed in December 2007' be sure to label your bond demand curves accordingly (subscript 12l07). Note that we don't know the prices of these two bonds but we do know what happens to the prices. Now add in the new conditions that existed in December of 2008. We are holding the supply of both bonds constant in this example
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