Question
please answer short question based on article Real Bond Yields Help Explain Surprising Market Moves 1 According to the WSJ article, why the US 10-year
please answer short question based on article Real Bond Yields Help Explain Surprising Market Moves"
1 According to the WSJ article, why the US 10-year Treasury Note, despite having a positive nominal yield, ends up having a negative 'real' yield? How high is the expected inflation rate in such a case?
2 If a negative return/yield is expected by buying a US 10-year Treasury Note, why would some investors still be willing to buy this asset? Which may be the reason/rationality for doing so? Please elaborate.
3 According to the article, the negative expected yield of the US 10-year Treasury boosts the stock market performance. Why would investors buy stocks in the current circumstances? Please elaborate.
4 According to the article, why many investors think that the lower yields/interest rates are the consequence of the Federal Reserve actions? The Federal Reserve sets the short term target Fed Funds rate. How the short term Fed Funds rate affects the longer term interest rates and in which way longer term interest rates may contribute to borrowing, spending and stimulating economic activity? Please elaborate and be as specific as possible.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started