In the bond market, the bond supply is more sentitive to negative macroeconomic shocks than the...
In the bond market, the bond supply is more sentitive to negative macroeconomic shocks than the bond demand.
answer whether or not the statement is True (T) or False (F). Briey justify your answer.
Homework Answers
This statement is correct and True.
Negative macroeconomic shocks like unexpectecd inflation , Change in Interest rate outlook changes the Bond supply significantly based on firms expectation of future business profitability based on these events and expected cash flow. So these events impact the Bond supply directly and Bond supply is quite sensitive to these type of macro economic shocks.
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