If inflation is expected to decline, what can we expect from bond prices and their yields?
If inflation is expected to decline, what can we expect from bond prices and their yields?
8-1 What is the relationship between…. a) bond prices and yields? b) bond prices and interest rates? c) why are bond prices important to many financial institutions? 8-2 Is the price of a long term bond or the price of a short term security more sensitive to a change in interest rates? Why? 8-3 Why does the required rate of return for a particular bond change over time? 8-4 Assume that inflation is expected to decline in the near future....
1a.)When there is disruption and political turmoil outside the U.S., what can we expect will happen to corporate bond prices and Treasury bond prices? 1b.) If portfolio managers expect stronger economic growth, what can we expect will happen to corporate bond prices and Treasury bond prices?
If the government spends more money and finances it with additional borrowing, we would expect bond prices to rise O bond yields to rise O bond yields to fall O current yields to remain flat but yields to call to decrease
If exports permanently decline, we would expect, in the medium run, O interest rates to increase and the rate of inflation to fall. o interest rates to fall and the rate of inflation to increase. O O a decline in both the rate of inflation and interest rates. no change in interest rates or the rate of inflation.
Suppose that expected inflation rises by 8 percent at the same time that the yields on money and on non-money assets both rise by 8 percent. What will happen to the demand for money? The expected real yields on money and on non-money assets (Click to select) and the demand for money ( (Click to select) What if ex cted inflation rose by only 7 percent? The expected real yields on money and on non-money assets both and the demand...
You expect interest rates to decline and wish to capitalize on the anticipated changes in bond prices. To realize your maximum gain, all else constant, you should purchase _____bonds? a. short-term; low coupon b. short term;high coupon c long-term; zero coupon d long-term; low coupon e long-term; high coupon
-. A news article from April 2015 reported that gasoline prices were expected to decline by32 percent during the summer of 2015 while “US drivers are expected to consume slightly more gasoline, a 1.6 percent increase, during the summer.” Calculate the price elasticity of demand for gasoline from this information. Is the demand for gasoline elastic or inelastic? Explain. [source: Damian J. Troise, “Summer Gas Prices Expected to Be 32 Percent Lower This Year,” Associated Press, April 7, 2015.] -....
help needed: How do we calculate bond yields and bond values? Do we follow the general principal of assets being worth the present value of expected cash flows? Bond yield is a special use of the internal rate of return. Discuss.
4. Suppose that people expect inflation to equal 3 percent, but in fact prices rise by 5 percent. Indicate whether this unexpected higher rate of inflation would help or hurt each of the following groups. a. a homeowner with a fixed-rate mortgage. b. a union worker with a fixed labor contract C. a company that has invested some of its endowment in government bond which pay fixed rate of return. 5 Indicato bow 0ach of +he following ovents
2. Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Enterprises Smith Incorporated Irwin Metalworks 12% 995 Each bond has 10 years until maturity and has the same risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. Label the curves on the following graph to indicate the path that each bond's price, or value, is expected...