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Question #1: Theory of Portfolio Choice [15 Points; 3 Points each] For each of the following circumstances state if your demand for 10-year Treasury bonds
Question #1: Theory of Portfolio Choice [15 Points; 3 Points each] For each of the following circumstances state if your demand for 10-year Treasury bonds will increase or decrease. Briefly explain (no more than 1-2 sentences your reasoning. (a) You become more pessimistic about future returns in the stock market. (b) You uninsured house was destroyed in a massive earthquake. (c) E-Trade offers lower trading commissions for investors who use the internet to conduct bond transactions. (d) You anticipate more volatility in the stock market. (e) Bond investors expect higher interest rates in the future Question #1: Theory of Portfolio Choice [15 Points; 3 Points each] For each of the following circumstances state if your demand for 10-year Treasury bonds will increase or decrease. Briefly explain (no more than 1-2 sentences your reasoning. (a) You become more pessimistic about future returns in the stock market. (b) You uninsured house was destroyed in a massive earthquake. (c) E-Trade offers lower trading commissions for investors who use the internet to conduct bond transactions. (d) You anticipate more volatility in the stock market. (e) Bond investors expect higher interest rates in the future
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