On January 22, 2015, the European Central Bank (ECB) put out the following Press Release:

ECB announces expanded asset purchase programme:

• ECB expands purchases to include bonds issued by euro area central governments, agencies and European institutions
• Combined monthly asset purchases to amount to 60 billion
• Purchases intended to be carried out until at least September 2016
• Programme designed to fulfil price stability mandate

The Governing Council of the European Central Bank (ECB) today announced an expanded asset purchase programme. Aimed at fulfilling the ECB's price stability mandate, this programme will see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes in order to address the risks of a too prolonged period of low inflation.

The Governing Council took this decision in a situation in which most indicators of actual and expected inflation in the euro area had drifted towards their historical lows. As potential second-round effects on wage and price-setting threatened to adversely affect medium-term price developments, this situation required a forceful monetary policy response.

Asset purchases provide monetary stimulus to the economy in a context where key ECB interest rates are at their lower bound. They further ease monetary and financial conditions, making access to finance cheaper for firms and households. This tends to support investment and consumption, and ultimately contributes to a return of inflation rates towards 2%.

The programme will encompass the asset-backed securities purchase programme (ABSPP) and the covered bond purchase programme (CBPP3), which were both launched late last year. Combined monthly purchases will amount to 60 billion. They are intended to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.

The ECB will buy bonds issued by euro area central governments, agencies and European institutions in the secondary market against central bank money, which the institutions that sold the securities can use to buy other assets and extend credit to the real economy. In both cases, this contributes to an easing of financial conditions.

Based on the ECB Press Release, please explain the following:

1A) What is the purpose of expanding the asset purchase programme, which was established in October 2014?

2A) The Press Release mentions that the "purchase programme" (note: this is a British spelling) will include "sovereign bonds", "asset-backed securities" and "covered bonds". Can you explain what are these bonds and securities? For example, what are "sovereign bonds", etc....

3A) The Press Release also mentions that the "expanded purchase programme" will last until September 2016 or until the inflation rate reaches the target of 2%. Do you know the reasons why the ECB announces the end date of the programme and the inflation rate target? (Hint: When you answer this question you should think as a long term investor)