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I only need the answer! thank you. 4. Which of the following is an incentive for buying a Treasury STRIP? Investors can buy the rights
I only need the answer! thank you.
4. Which of the following is an incentive for buying a Treasury STRIP? Investors can buy the rights to a variable interest rate return if they hold the STRIP instrument until maturity. Investors can gain the certainty of a known return if they hold the STRIP instruments until maturity. 7. If a Fed watcher expects the fed funds rate to fall, he or she knows that the Fed will most likely seek a slowdown in overall economic activity sell government bonds decrease the supply of fed funds buy government bonds a rise in the price of both stocks and bonds a reduction in the real future value of physical assets,increasing the demand for bonds a rise in the nominal future value of physical assets,resulting in higher capital gains for such assets and reducing the demand for bonds 7. In an open economy, if the domestic interest rate is below the world interest rate, then That economy will become a net borrower abroad. That economy will become a net lender abroad. The real world interest rate is likely to fall. 8. How does the government budget deficit affect the bond market? The government budget deficit will have no effect on the bond demand and supply curves. The increased supply of bonds will increase the price of bonds and lower the interest rates on government bonds. The bond supply curve will shift to the right, but households will likely keep savings constant, so bond prices fall and interest rates rise. 10. If the bond market is initially in equilibrium, and bond prices temporarily drop below equilibrium, the result will be an excess demand for bonds and an excess demand for loanable funds an excess demand for bonds and an excess supply of loanable funds an excess supply of bonds and an excess supply of loanable funds an excess supply of bonds and an excess demand for loanable fundsStep by Step Solution
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