Discuss few major factors for changing the interest rates

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Reference no: EM133239154

Discussion questions -

1. Explain why the bond price must fall when the interest rate rises.

2. Explain why the real interest rate is a better measure of the tightness of credit market conditions than the nominal interest rate.

3. Explain why the between the return on a security and the interest rate as measured by the yield to maturity can differ substantially.

4. Explain the positive relationship between the duration of a security and its interest-rate risk.

5. Explain the relationships between the quantity demanded of an asset and wealth, the expected return on the asset relative to alternative assets, the riskiness of the asset relative to alternative assets, and the liquidity of the asset relative to alternative assets.

6. Explain why diversification benefits investors.

7. Explain the theory of how interest rates are determined, as derived from the supply and demand analysis for bonds.

8. Discuss few major factors for changing the Interest rates.

Reference no: EM133239154

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