Questions from Financial Markets

Q: Explain how bond prices may be affected by money supply growth,

Explain how bond prices may be affected by money supply growth, oil prices, and economic growth.

Q: Consider the prevailing conditions for inflation (including oil prices), the

Consider the prevailing conditions for inflation (including oil prices), the economy, the budget deficit, and the Fed’s monetary policy that could affect interest rates. Based on these conditions, do...

Q: Assume that breaking news causes bond portfolio managers to suddenly expect much

Assume that breaking news causes bond portfolio managers to suddenly expect much higher economic growth. How might bond prices be affected by this expectation? Explain. Now assume that breaking news c...

Q: Is the price of a long-term bond or the price

Is the price of a long-term bond or the price of a short-term security more sensitive to a change in interest rates? Why?

Q: Compare the secondary market activity for mortgages to the activity for other

Compare the secondary market activity for mortgages to the activity for other capital market instruments (such as stocks and bonds). Provide a general explanation for the difference in the activity le...

Q: Explain how a mortgage company’s degree of exposure to interest rate risk

Explain how a mortgage company’s degree of exposure to interest rate risk differs from other financial institutions.

Q: What is the general relationship between mortgage rates and long-term

What is the general relationship between mortgage rates and long-term government security rates? Explain how mortgage lenders can be affected by interest rate movements. Also explain how they can insu...

Q: How does the initial rate on adjustable rate mortgages (ARMs)

How does the initial rate on adjustable rate mortgages (ARMs) differ from the rate on fixed-rate mortgages? Why? Explain how caps on ARMs can affect a financial institution’s exposure to interest rate...

Q: Describe how the interaction between buyers and sellers affects the market value

Describe how the interaction between buyers and sellers affects the market value of a firm and explain how that value can subject a firm to the market for corporate control.

Q: What is the danger of issuing too much stock? What is

What is the danger of issuing too much stock? What is the role of the securities firm that serves as the underwriter, and how can it ensure that the firm does not issue too much stock?