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Discuss the effect of an increase in the riskiness of bonds (relative to other assets) on the interest rate. Perform separate analyses--explain in detail the
Discuss the effect of an increase in the riskiness of bonds (relative to other assets) on the interest rate. Perform separate analyses--explain in detail the market effects and include a graphical analysis--using the bonds market and the liquidity preference framework (money market). Do your separate analyses reach the same conclusion?
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