What are two reasons for low interest rates on US government bonds relative to private bonds?
US bonds are more secure than the private bonds that increases the demand for the government bonds in the market, at a higher demand the price of the bonds rises and at a higher prices the interest rate of the bonds will be low, price of the bonds and interest rates are inversely related in the market.
Private bonds are more insecure that makes the demand less and prices low there by they have a high interest rate in the market.
What are two reasons for low interest rates on US government bonds relative to private bonds?
QUESTION 10 Cap rates are influenced by the yield on US government bonds and interest rates but are ultimately set by the flow of funds into the commercial real estate market? True False
c) Predict what will happen to interest rates on a corporation's bonds if the federal government guarantees today that it will pay creditors if the corporation goes bankrupt in the future. What will happen to the interest rates on Treasury securities? d) In 2010 and 2011, the government of Greece risked defaulting on its debt due to a severe budget crisis. Using bond market graphs, compare the effects on the risk premium between U.S. Treasury debt and comparable-maturity Greek debt.
Question 14 I. The interest earned on the holding of US government bonds by foreigners: a. would be recorded as a debit (-) in the US capital account b. would be recorded as a credit (+) in the US current account c. would be recorded as a debit (-) in the US current account d. would be recorded as a credit (+) in the US capital account II. The purchase of US government bonds by foreigners: e. would be recorded...
1. An increase in Canada's interest rates relative to US interest rates should A. encourage more Canadians to vacation in the US B. encourage more Americans to vacation in Canada C. decrease the value of the Canadian dollar D. stimulate Canada's exports 2. Which of the following is not likely to result in an appreciation of the Canadian dollar? A. more Canadians vacation in Florida B. the demand for Canadian dollars on foreign exchange markets exceeds the supply C. an increase in Canadian interest rates D. expectations of...
When government borrowing leads to higher interest rates, which can in turn reduce private investment, this is referred to as the indirect crowding-out the direct crowding-out open economy effect none of the above
7. Inflation, interest rates, and exchange rates Aa Aa E Relative inflation rates affect interest rates, exchange rates, the overall economic health of a country, and the operations and profitability of multinational companies. Consider the following statement: If a company borrows from a country with low interest rates, and the currency of the lending country appreciates, it becomes more expensive for the borrowing company to repay the initial loan. Based on your understanding of the relationship between relative inflation rates...
15. Low-interest rates in the US, Japan, and other developed countries favored increased capital flows to East Asian countries. Explain why.
1. The primary economic function of the financial system is to a. keep interest rates low. b. provide expert advice to savers and investors. c. match one person's consumption expenditures with another person's capital expenditures. d. match one person's saving with another person's investment. 2. A mutual fund a. is a financial institution that stands between savers and borrowers, b. is a financial intermediary, c. allows people with small amounts of money to diversify their holdings. d. All of the...
1. Using Demand-Supply framework (Portfolio Choice Theory) explain the impact on the interest rates on Treasury Bonds, Municipal Bonds and Corporate Bonds as a result of the following events.a. The business environment worsensb. US Treasury cuts tax ratesc. Housing market becomes more liquidd. Moody’s Rating company downgrades Corporate Bonds
What are the reasons for very high nominal interest rates in the 1980s?