Question
If the CPI was expected to grow by 8% and the reported number is 6%, what effect will it have on the following Treasury Securities?which
If the CPI was expected to grow by 8% and the reported number is 6%, what effect will it have on the following Treasury Securities?which is correct option
Bond 1: 30 year T-Bond with a duration of 25 years Bond 2: 30 year T-Bond with a duration of 15 years
Bond 3: 5 year T-Bill with a duration of 4.5 years Bond 4: 5 year T-Bill with a duration of 3.5 years
a.Bond 1's price will increase the most and Bond 4's price will increase the least
b.Bond 1 and Bond 2 will each decrease by the same percentage and Bond 3 and Bond 4 will also decrease by the same lower percentage than Bond 1 and Bond 2
c.Bond 1 and Bond 2 will each increase by the same percentage and Bond 3 and Bond 4 will also increase by the same lower percentage than Bond 1 and Bond 2.
2. Why were interest rates cut to nearly zero after the Lehman Brothers collapse?which is correct option.
a.To stimulate economic growth.
b.To curb inflation.
c.To increase the attractiveness of depositing cash.
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