Difference between long term and short term interest rates

Reference no: EM1368520

In late June the Fed lowered its federal funds rate target from 1.25% to 1%. However between mid June and early August the yield on longer term 10 year Treasury notes rose from 3.1% to over 4.3%. This shows that Federal Reserve activity is irrelevant to the behavior of long term interest rates"

Agree or Disagree with the underlined portion of the above quote and explain your reasoning clearly. (If you agree, explain why Fed activity has no influence on long term rates...if you disagree, explain why longer term yields actually increased following the decline in the federal funds rate and what the increased difference between long term and short term rates signifies about investor expectations.)

Reference no: EM1368520

Questions Cloud

Explain advantages and disadvantages of just-in-time : Explain and Contrast the advantages and disadvantages of just-in-time learning and Evaluate whether or not this is a valid and worthwhile investment to help increase the productivity within an organization.

Write program to prints question do you want to continue : Write a program which prints question"do you want to continue?"and reads user input. if user input is"y", "yes", "ok", "sure", or "why not?" , print out "ok".

Question on increase real gdp : Assume that the MPC is .8 and that $10 trillion of real GDP is currently being demanded. The government wants to increase real GDP demanded to $11 trillion.

Explain why would a company use a bundled pricing strategy : Explain Why would a company use a bundled pricing strategy for its products and Why not just sell the items separately and charge a higher price?

Difference between long term and short term interest rates : In late June the Fed lowered its federal funds rate target from 1.25 percent to 1 percent. However between mid June and early August the yield on longer term 10 year Treasury notes rose from 3.1% to over 4.3%.

Define criterion for evaluating alternatives to cross river : Slower person dictates crossing time. Canoe is the only mode of transportation and can't be shuttled empty. Define criterion for evaluating the alternatives.

Explain kathleen manages a manufacturing plant for scanrite : Explain Kathleen manages a manufacturing plant for ScanRite, Inc and a producer of scanners and other input devices connected to computers.

Determine marginal value : The textbook claims that when people do not have to pay anything to use valuable resources, such as urban roadway space, they will continue using them until their value diminishes to zero.

How linear structures-particularly arrays-are implemented : Project at work calls for storage of computer maintenance schedule information. Using C# as source language, investigate how linear structures-particularly arrays-are implemented.

User Account

All Pages