Question

Qualitatively what will happen to the price of your bonds if: you own Treasury Bonds and...

Qualitatively what will happen to the price of your bonds if: you own Treasury Bonds and a deep decline in US GDP occurs? you own Treasury Bonds and the FED tries to stimulate the US economy? you own Hauser Oil Corporate Bonds, and Hauser Oil has a massive oil spill?

Homework Answers

Answer #1

During Decline in US GDP the risk will increase and hence yield will increase thereby reducing the price of the bonds.
When the Fed tries to stimulate the US economy then interest rates will fall and hence yield of bonds will fall thereby increasing the price of bonds.
If Hauser oil has a massive oil spill risk of their bond increases due to clean up amount and penalties. Hence yield will increase and price of the bonds will decrease.

Please Discuss in case of Doubt

Best of Luck. God Bless
Please Rate Well

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What do you expect to happen to the money multiplier as the economy moves into a...
What do you expect to happen to the money multiplier as the economy moves into a deep recession? Explain assuming that the Fed does not adopt discretionary monetary policy to stimulate the economy.
The thirty-year US Treasury bond has a 2.5% coupon and yields 3.3%. What is its price?...
The thirty-year US Treasury bond has a 2.5% coupon and yields 3.3%. What is its price? A thirty-year corporate bond with a 4% coupon is priced at par. Is it possible for the corporate bond to have a higher price than the Treasury? How is the corporate bond’s “spread” quoted? Both bonds are 100 face and semi-annual
what would you expect to happen to the spread between yields on commercial paper and treasury...
what would you expect to happen to the spread between yields on commercial paper and treasury bills if the economy were to enter a steep recession.
It is 1979 and there is a sudden decline in oil supplies due to political turmoil...
It is 1979 and there is a sudden decline in oil supplies due to political turmoil in the Middle East which sends the price of crude oil skyrocketing. Assume that the US economy is initially operating at its potential level output (hint: this means that the US economy is both at its short and long run equilibrium). a) What will this event cause in terms of the equilibrium price level and output? How about the rate of unemployment? b) You...
If the current income tax exemption on municipal bonds were abolished, what would happen to the...
If the current income tax exemption on municipal bonds were abolished, what would happen to the interest rate on municipal bonds? What effect would the change have on interest rates on U.S. Treasury securities? You must provide appropriate demand and supply graphs and explain your answer. Label the graphs properly.
Which one of the following are zero-coupon bonds? I) Treasury bill II) Treasury note III) Treasury...
Which one of the following are zero-coupon bonds? I) Treasury bill II) Treasury note III) Treasury bond IV) Commercial paper V) Agency bonds I, V I, II, III I, IV, V II, III I, IV You buy a call option on Citibank with the strike price of 100. Suppose the Citibank's stock price is 110 on the option expiration date. What is your payoff? 0. 10. 20. -10. -20. According the lectures, what one of the following signals can be...
            Assume you have the following information for Treasury Notes and Bonds. What “Asked Yield (%)”...
            Assume you have the following information for Treasury Notes and Bonds. What “Asked Yield (%)” should be listed in the table for the two quotes? Report your answer to three decimal places. Treasury Notes and Bond Quotes (as of 4/15/2022) Maturity Coupon Rate (%) Bid Price Asked Price Asked Yield (%) 4/15/2024 3.500 102.0000 103.0000 4/15/2026 8.500 110.0000 111.0000
Suppose that you inherited some 2.25% US Treasury bonds from your grandfather that mature in 2027....
Suppose that you inherited some 2.25% US Treasury bonds from your grandfather that mature in 2027. Although they were originally purchased at par (and will mature at $1,000), they currently have a market value of around $950 each. If you believe that interest rates will continue to rise, should you sell, hold, or try to buy more? Explain why.
1. From your own experience, in what way has the economy impacted you in the last...
1. From your own experience, in what way has the economy impacted you in the last year? Give some examples. Do you think the economy has impacted you in a positive or negative way? Why? Let me know what you think. 2. If economics is the study of how we choose to use resources, what are some of the choices that you have had to make in the last week or month that connect you to the economy? Give some...
You own your own business, and your research indicates that the price elasticity of demand for...
You own your own business, and your research indicates that the price elasticity of demand for your product is 3.5. What pricing stratigies should you follow and why?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT