Question

Subject: CD Rates and the Bond Market

Please answer the following question:

Why did the bond market activity boom immediately after the financial crisis of 2007-2008? How were large firms and small firms affected differently by the crisis? Explain. Please at least 250 words.

Please don't copy from anywhere and write in your own words. Thank You!

Answer 1

1.WHY DID THE BOND MARKET ACTIVITY BOOM IMMEDIATELY AFTER THE FINANCIAL CRISIS 2007-2008?HOW WERE LARGE FIRMS AND SMALL FIRMS AFFECTED DIFFERENTLY BY CRISIS?EXPLAIN?

A)In order to understand this we must first understand what is BOND MARKET and how it functions?It is often call debt market or credit market is a financial market where participants can issue new debt! known as primary market or buy or sell debts securities,known as the secondary market.This is usually in the form of bonds,but it may include notes,bills and so on.Bonds are loans made of large organisations these include corporations,cities and national governments.Bonds are type of fixed income investments there are many other types of investments they are CASH,STOCKS,COMMODITIES,and DERIVATIVES.It is one of the largest securities market in the world where investors will be having options..so now the crisis is the break down of the trust that occurred between banks the year before the 2008 crises.it was caused by the subprime mortgage crisis,which itself was caused by the unregulated use of derivatives.it is one of the worst economic disaster of the year 2008 and then the severe contraction of the of liquidity in global markets that originated in the united states as a result of the collapse of the u.s housing market. Firms were under huge pressure and they lost lot of their investment and the shares and the market had went down quite drastically resulted in the crisis of the goods and the market share has been down in the concerned years.LARGE and as well as SMALL firms has taken severe beatings on the hands of the crises.they lost the market.they were quite affected by the business operations and they not only differ in size but by the larger extend of the legal structures and tend to have financing arrangements and market niches.