What might cause interest rates to be low one year and high the next?

Q: Discuss briefly how do interest rates affect the economy?

A: The amount of interest due per year, expressed as a percentage of the amount lent, invested, or…

Q: Is it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?

A: Yes, it is possible for a one-year coupon bond to have a negative nominal interest rate as long as…

Q: People should buy bonds when they think that interest rates are as high as they will go.

A: A bond is a financial instrument that allows an issuer to raise capital by borrowing money from…

Q: If government spending were increased, what would occur to interest rates

A: Government spending refers to the money spent by the government on things like health care,…

Q: Describe how interest could be  good or bad, depending on the situation, and explain why interest…

A: If properly managed, a LOW INTEREST RATE can be beneficial. Low interest rates reduce demand for the…

Q: If the Federal Reserve wants to set an interest rate that best promotes economic growth and new…

A: Answer - Need to find - factors should they consider Given in the question- If the Federal Reserve…

Q: Explain why negative real interest rates cannot exist in an economy that is properly functioning

A: When interest is given to borrowers rather than lenders, it is referred to as having a negative…

Q: When interest rates decrease, how might businesses andconsumers change their economic behavior?

A: The interest rate is the rate charged by the lender on the asset lend by them. The asset lend can be…

Q: Which situation leads to the distinction between nominal and effective interest?

A: If the compounding is more frequent than once per year, then the nominal and effective interest rate…

Q: Would it be advantageous to borrow money if you expected prices to rise?  Would you want a…

A: Inflation is change in the overall price level of the economy. Generally, interest rates for loans,…

Q: The cost of money is established and measured by an interest rate. True or false?

A: Answer - Cost of Money -  Cost of the money is amount of interest can be charged on the money…

Q: Suppose Ford Motor Company issues bonds with a face value of $500 and an annual coupon payment of…

A: Face value is the actual value of a digit in a number. To get the place value of a number, we…

Q: would bonds still be a good option for investment if interest rates are negative?

A: Negative-yielding bonds are monetary instruments that cause buyers to lose cash.  They are typically…

Q: Write the two types of interest rates used in equivalence calculation rates?

A: The amount of interest received for an investment at the end of a year need to calculate its…

Q: pose that interest'rates fall. This will cause:

A: If interest rates falls then cost of borrowing money from the money market decreases.  Investors…

Q: Do the interest rates reflect the market interest rate?

A: An amount of money due per period as a proportion of the loan, deposit, or borrowing amount is…

Q: complete this sentence: High interest rates might might purchasing a house, but at the same time…

A: High interest effects both the borrower and lender in the different manner As interest rate…

Q: How do people typically respond to higher real interest rates? by saving less by paying more taxes…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: If you hold a bond at a time when the market interest rate is increasing, you will find that the…

A: Interest Rate Risk: The phenomenon of an inverse relationship between market interest rates and bond…

Q: Market interest rates are established by the banks or any financial institutions. True or false?

A: Answer -  Market Interest rate - It is the interest rate given on the deposits or other investments…

Q: What are the applications of partial derivatives in economics?

A: The derivative of a function of a single variable that depicts quickness of change in function value…

Q: When is the simple interest scheme used?

A: Simple interest is a method which is used to calculate interest charged on fixed deposit, loan and…

Q: How can market forces of supply and demand affect interest rates and the economy

A: The demand and supply affect interest rates in the money market. The money market is the market that…

Q: Interest rates: why are interest rates increasing on student loans or mortgages?

A: Secured Loan:- A secured loan is one that is supported by secured financial assets owned by the…

Q: Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed…

A: Financial economics deals with the financial markets, their operations and functions, and the…

Q: Distinguish between Market and Inflation-Free Interest Rates?

A: The Market interest Rate, also called the nominal interest rate (i) is the rate which is not…

Q: Describe what is Market interest rate?

A: The rate of interest which is determined by the interaction of demand for and supply of funds in the…

Q: Do the financial institutions usually quote the interest rate on an annual basis?

A: The interest rate is a specific percentage of principal that must be paid by a borrower of money to…

Q: Why interest rates differ at any given time a range of interest rates prevails in the economy. what…

A: The money market equilibrium is determined where money demand is the money supply. It helps in…

Q: The discount rate will never be equal to interest rate. True or False?

A: Discount rate is defined as the rate of interest which is charged to commercial banks and other…

Q: If interest rates increase in financial markets, then...

A: Interest rates are defined as the charges taken by the lenders for the money lent ti the borrower.…

Q: What will happen in the bond market if the government imposes a limit on the amount of daily…

A: If the government imposes a limit on daily transactions, then the ones who buy and sell in the…

Q: Would the interest rate increase be more likely to hurt or help the financial institution’s…

A: Interest rates affect the profitability of financial institutions. The financial institutions…

Q: How can financial institutions overcome the inevitable mobility of students after graduation?

A: A financial institution is an organization that deals in several forms of monetary transactions,…

Q: You hold a two-period bond that pays a coupon  at the end of each period. The interest rate is…

A: Holding a two-period bond, that pays a coupon at the end of each period with an interest rate of…

Q: what are the economic goals of high-interest rate?

A: The interest rate is a proportion of the principal, which is the amount borrowed, that a lender…

Q: What does the interest rate measure?

A: Market interest rate refers to the interest rate that the lenders expect or demands from the…

Q: Causes and effects of low interest rates

A: The interest rate is determined by the intersection of demand and supply of loanable funds. It is…

Q: Which state body determines the value of the interest rate and what instruments are used to regulate…

A: The central bank determines the value of the interest rate and what instruments are used to regulate…

Q: Raphael observes that at the current level of interest ratesthere is an excess supply of bonds, and…

A: The bonds and shares of a company will be purchased on the basis of the available information such…

Q: Which factors affect the yield to maturity (or return on investment?

A: Yield to Maturity provides a benchmark for evaluation of different types of investment instruments.

Q: When the interest rate rises, bond values

A: GIVEN   the interest rate raise,bond values is