Questions from Financial Markets

Q: The European Central Bank uses reserve transactions in its version of open

The European Central Bank uses reserve transactions in its version of open market operations. Explain to someone with no training in economics what reserve transactions are.

Q: Explain how the European Central Bank’s interest payments on the deposits commercial

Explain how the European Central Bank’s interest payments on the deposits commercial banks have at the ECB provides an interest rate floor for the interbank lending rate.

Q: If the ECB is pursuing an expansionary monetary policy, it will

If the ECB is pursuing an expansionary monetary policy, it will do which of the following?

Q: Explain why economists in the 1960s were so perplexed about why stagflation

Explain why economists in the 1960s were so perplexed about why stagflation had occurred.

Q: Explain how TIPS, or Treasury inflation-protected securities, actually

Explain how TIPS, or Treasury inflation-protected securities, actually protect investors from inflation.

Q: During the Reagan Administration in the 1980s, while the US government

During the Reagan Administration in the 1980s, while the US government was running large government budget deficits, the rest of the world was also bringing large amounts of their savings to the Unite...

Q: Shoma is thinking about buying a municipal bond. She notices some

Shoma is thinking about buying a municipal bond. She notices some are revenue bonds, whereas others are general obligation bonds, but she does not understand what these are. How would you explain this...

Q: Sunita wants to earn the highest possible after-tax return on

Sunita wants to earn the highest possible after-tax return on her savings. She has two options: a corporate bond and a tax-free government bond. The corporate bond yields 5%, and Sunita is in the 25%...

Q: Jenny is considering purchasing a bond, but she notices that the

Jenny is considering purchasing a bond, but she notices that the bond has many covenants. She is unsure what they mean. How would you explain these covenants to Jenny?

Q: Why do bonds have sinking funds? How are they different from

Why do bonds have sinking funds? How are they different from a call provision?