Question

why it is critical for us to learn the concept of bond evaluation??
Explain the Federal Reserve’s recent reasoning on interest rates? What is your view on the Fed’s decision making?

Answer 1

Bond evaluation is the process by which the performance of a bond is measured. When a company wants to raise money for carrying out their business activities then. it can do so by issuing bonds. The people who are interested in purchasing the bond would evaluate the performance of the bond and then buy it. The concept of bond evaluation is critical as it helps in determining the bond price and the interest rates as well.

On 26th September, 2018 i.e. the recent change in the interest rates is that of an increase by 0.25% The reasoning given is that Fed wants to make borrowing money more expensive. This will lead to decreasing the amount of money that the consumers can spend.

My view is that Fed's decision is apt as it leads to controlling the spending habits and finally controlling inflation.