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Why does long term bond fluctuate more when interest rates change than do the short term?
Wiki User
∙ 12y ago
longer term bond fluctuates more because in the longer term market conditions changes dramatically....in the long term their face value may eiter increase or decrease due to increase in interest rates.
Wiki User
∙ 12y ago
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Discuss the relative volatility of short- and long-term interest rates?
short- and long-term interest rates usually move in the same direction. Yield curve is often upward, so, long-term interest rates are usually higher than short-term interest rates. short-term interest rates are often more fluctuating than long-term rates.
Which fluctuate more long-term or short-term interest rates?
short-torm interest rate. becaz short-term intereat rate are more responsive to current economic conditions, whereas long-term tare primarily reflact long-run expactation for inflation. becaz it's controlled by the government wants and can be change by a point instanly or many points in less then one year. becaz bank negara operate mainly in short term interest rate, intervention has a major effect. (for malaysia)
Are interest rates on long term bonds usually lower or higher than interest rates on short term bonds?
Higher
When the term structure of interest rates is downward sloping and interest rates are expected to decline?
financial manager generally borrows short-term
In the short run an increase in the money supply results in?
lower interest rates..
Discuss the relative volatility of short- and long-term interest rates?
short- and long-term interest rates usually move in the same direction. Yield curve is often upward, so, long-term interest rates are usually higher than short-term interest rates. short-term interest rates are often more fluctuating than long-term rates.
What are Wells Fargos current home equity loan rates?
Wells Fargos's home equity loan rates fluctuate depending on the current interest rates. The home equity loan rate can change frequently in a short period of time. To find the most current home equity loan rates for Wells Fargo, it is best to contact the company directly or via their website.
What would happen to real short term interest rates if the Fed kept short term market interest rates at zero and deflation occurred and was expected to continue?
Macroeconomics Question: What would happen to real short term interest rates if the Fed kept short term market interest rates at zero and deflation occurred and was expected to continue?
Which fluctuate more long-term or short-term interest rates?
short-torm interest rate. becaz short-term intereat rate are more responsive to current economic conditions, whereas long-term tare primarily reflact long-run expactation for inflation. becaz it's controlled by the government wants and can be change by a point instanly or many points in less then one year. becaz bank negara operate mainly in short term interest rate, intervention has a major effect. (for malaysia)
Would a short term monetary policy take most action in lower interest rates?
lower interest rates
Are interest rates on long term bonds usually lower or higher than interest rates on short term bonds?
Higher
When the term structure of interest rates is downward sloping and interest rates are expected to decline?
financial manager generally borrows short-term
How do interest rates affect investment?
When interest rates are high, investors will consider investing in short term investments, instead of long term investments. When interest rates are low, investors will consider investing in bonds because they are safer.
In the short run an increase in the money supply results in?
lower interest rates..
What can the Federal Reserve Bank of New York do to control short term interest rates?
To control short term interest rates, the Federal Reserve Bank of New York should establish a floor on money market rates while improving monetary policy.
A normal term structure of interest rates would depict?
long-term rates higher than short-term
What does the term structure of interest rates indicate?
The term structure of interest rates is often referred to as a yield curve. It shows the relative level of short-term and long-term interest rates at a point in time. Knowledge of changing interest rates and interest rate theory is extremely valuable to corporate executives making decisions about how to time and structure their borrowing between short- and long-term debts. the yield curve indicates the movements of interest rates. For example, a downward curve indicates that the interest rate will fall in the future. these signals help firms to manage their debt structure.
