Question

Fed. provides liquidity to the capital market and asserts to buy corporate bonds. What would investors...

Fed. provides liquidity to the capital market and asserts to buy corporate bonds. What would investors do to take advantage of this bailout plan?

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Answer #1

When the Federal Reserve provides liquidity to the capital markets and asserts to buy corporste bond, it means that investors can also load onto the shares because the market is going to go up and it is a positive signal for the market that Federal Reserve is backing them up and protecting them against any adverse situation so they should load on to their shares and they will have a chance to make more money as the federal reserve is trying to pump up the market.

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