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What type of risk is the risk that a bond will decrease in value when interest rates in the economy rise inflation or deflation or by interest rate or financial?
Bastiansw
Increases in Expected Future Interest Rates (forward rates) as well as adverse changes in those influences that might cause future interest rates to be higher than expected, such as higher inflationary expectations will typically cause secondary market prices for bonds to go lower.
This is a kind of Market Risk (risk to the Market Price of an investment) and can has a sensitivity that is typically measured using Modified Duration. Definitions of these terms can be found at www.davidandgoliathworld.com
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What factors that influence money supply?
inflation ,deflation, interest rate
What are the factors that affects financial instruments?
Many factors affect the financial market, particularly the stock market. Examples include inflation and deflation, interest rates, foreign markets, and exchange rates.
How can the government prevent increase in interest rates?
The most efficient way is to get a hold on the inflation rate (without causing deflation) by influencing growth labour costs.
Discuss the advantages and disadvantages of deflation?
As deflation is a decrease in the price level, there is also a proportional increase in the purchasing power of a dollar. Those who have saved money will be able to buy more than previously, and banks will earn more (real) interest on loans made. Those who borrow money, however, will be be paying a higher (real) rate of interest (even with a fixed rate loan).
Do interest rates rise during deflation?
yes they do rise during deflation
What factors that influence money supply?
inflation ,deflation, interest rate
What are the factors that affects financial instruments?
Many factors affect the financial market, particularly the stock market. Examples include inflation and deflation, interest rates, foreign markets, and exchange rates.
What does Hawk and Dove mean in financial terms?
Financial hawks favor low inflation over high economic growth, and want interest rates set high to keep inflation low. Financial doves prefer low interest rates and believe inflation has a minimal impact on society.
How can the government prevent increase in interest rates?
The most efficient way is to get a hold on the inflation rate (without causing deflation) by influencing growth labour costs.
What is the enemy of compound interest and makes it very difficult to reach your financial goals?
inflation
Discuss the advantages and disadvantages of deflation?
As deflation is a decrease in the price level, there is also a proportional increase in the purchasing power of a dollar. Those who have saved money will be able to buy more than previously, and banks will earn more (real) interest on loans made. Those who borrow money, however, will be be paying a higher (real) rate of interest (even with a fixed rate loan).
Do interest rates rise during deflation?
yes they do rise during deflation
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
What is the role of banking in national development?
The role of banking in national development is : 1- to control and adjust the rate of foreign exchange . 2- to control the financial stability of the country. 3- to control the interest rate. 4- to control the inflation and deflation. 5- to supply and distribute money equally. 6-mobilise financial resources 7-play advisory role in development
How do high interest rates affect the economy?
Higher interest rates have two main effects: 1) decrease demand for consumption, since the value of saving in the future is worth more than it was previously; 2) decrease the demand for money, since money's value is relatively less to assets which take interest into account. This means that higher interest rates decrease spending but also decrease inflation.
What would fed do to interest rates if it wanted to fight inflation?
Use a monetary policy to decrease the money supply.
What caused the 1974 recession?
My dick
