+1-415-670-9189
info@expertsmind.com
Explain how prices of u.s. money market securities
Course:- Finance Basics
Reference No.:- EM13298349




Assignment Help
Assignment Help >> Finance Basics

As a personal financial planner, one of your tasks is to prescribe the allocation of available funds across money market securities, bonds, and mortgages. Your philosophy is to take positions in securities that will benefit most from your forecasted changes in economic conditions. As a result of recent event in Japan, you expect that in the next month Japanese investors will reduce their investment in U.S. Treasury securities and shift most of their funds into Japanese securities. You expect that this shift in funds will persist for at least a few years. You believe this single event will have a major effect on economic factors in the U.S. such as interest rates, exchange rates, and economic growth in the next month. Because the prices of securities in the U.S. are affected by these economic factors, you must determine how to revise your prescribed allocations of funds across securities.

Assume that day-to-day exchange rate movements are dictated primarily by the flow of funds between countries, especially international bond and money market transactions. How will exchange rates be affected by possible changes in the international flow of funds that are caused by the event?

Explain how prices of U.S. money market securities, bonds, and mortgages will be affected.

Assess the impact on security prices. Would prices of risky securities be affected more or less than those of risk-free securities with a similar maturity? Why?

 




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Both systems entail $2 million in operating costs; both will be depreciated straight-line to a final value of zero over their useful lives; neither will have any salvage val
Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of .90 times at the end of 2008. If the firm's total assets at year-end were $50.4 million, how m
Refer to the overview flowchart in Figure 13.3 and the data flow diagram in Figure 13.8. Study the portions of the figures and the accompanying narrative that deal with the
The purchase of this debt would be financed by issuing $25 million in equity to the debt holders of Akron. Assuming debt policy that is consistent with the Hamada model, wha
Explain why a mere comparison of the NPVs of unequal-lived, ongoing, mutually exclusive projects is inappropriate. Describe the annualized net present value (ANPV) approach fo
The firm's average required rate of return, which is 15 percent, is adjusted by 5 percent for highrisk projects, and it is adjusted by 3 percent for low-risk projects. Which
How does a company issue a bond? and what type of bond is the best one to issue? Is Beta Coefficient still a valid measure? How do you valuate a companies worth? Do Market Bub
Basic Time Value of Money It is a common fact that many lottery winners are "broke" sooner than later. If you won a $1,000,000 lottery, would you want to collect the lump sum