Questions from Financial Markets

Q: What is the function of a mutual fund? Why are mutual

What is the function of a mutual fund? Why are mutual funds popular among investors? How does a money market mutual fund differ from a stock or bond mutual fund?

Q: Why is it important for long-term debt securities to have

Why is it important for long-term debt securities to have an active secondary market?

Q: If the segmented markets theory causes an upward-sloping yield curve

If the segmented markets theory causes an upward-sloping yield curve, what does this imply? If markets are not completely segmented, should we dismiss the segmented markets theory as even a partial ex...

Q: Do investors in high tax brackets or those in low tax brackets

Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities? Why? Do municipal bonds or corporate bonds offer a higher before-tax yield at a given point in t...

Q: Explain how a yield curve would shift in response to a sudden

Explain how a yield curve would shift in response to a sudden expectation of rising interest rates, according to the pure expectations theory.

Q: Assume an expectation of lower interest rates in the future arises quite

Assume an expectation of lower interest rates in the future arises quite suddenly. What would be the effect on the shape of the yield curve? Explain.

Q: Explain why participating in the eurozone causes a country to give up

Explain why participating in the eurozone causes a country to give up its independent monetary policy and control over its domestic interest rates.

Q: What should be the Fed’s role? Should it focus only on

What should be the Fed’s role? Should it focus only on monetary policy? Or should it engage in the trading of various types of securities in an attempt to stabilize the financial system when securitie...

Q: Assume that your publicly traded company attempts to be completely transparent about

Assume that your publicly traded company attempts to be completely transparent about its financial condition, and provides thorough information about its debt, sales, and earnings every quarter. Expla...

Q: Explain the motivation behind the Fed’s policy of purchasing massive amounts of

Explain the motivation behind the Fed’s policy of purchasing massive amounts of mortgage-backed securities during the 2008 credit crisis. What could this policy accomplish that its traditional monetar...