Heavy buying of the 3-month Treasury bill, considered one of the safest investments aroun a fractious day across the financial markets. ... When investors are fearful of taking risks, t the difference between the yield on a corporate bond and a government bond, have been a noted Citigroup economist Steven Wieting in a note Thursday. That means it could be very is essential to growing and maintaining a business if the credit markets don't thaw....In ot Treasury note fell 28/32 to 103 29/32. Its yield rose to 3.53 percent from 3.42 percent late Data. Yields move in the opposite direction from prices.... On Wednesday [September 17, soared so high that the yield briefly dipped into negative territory, which means a bill holde investors, a small loss is preferable to the massive declines seen this week on Wall Street. So what events, in particular, caused this rush to T-bills? The following unsettling developm for this freeze: the bankruptcy of Lehman Brothers Holdings Inc., the absorption of Merrill L billion government bailout of the insurer American International Group Inc., and a money-m failed to maintain assets of at least $1 for every dollar its clients invested. Answer the following two questions. Question 1: Explain the negative yield curve. Question 2: Explain how the relationship between the bond market and the economy.
Heavy buying of the 3-month Treasury bill, considered one of the safest investments aroun a fractious day across the financial markets. ... When investors are fearful of taking risks, t the difference between the yield on a corporate bond and a government bond, have been a noted Citigroup economist Steven Wieting in a note Thursday. That means it could be very is essential to growing and maintaining a business if the credit markets don't thaw....In ot Treasury note fell 28/32 to 103 29/32. Its yield rose to 3.53 percent from 3.42 percent late Data. Yields move in the opposite direction from prices.... On Wednesday [September 17, soared so high that the yield briefly dipped into negative territory, which means a bill holde investors, a small loss is preferable to the massive declines seen this week on Wall Street. So what events, in particular, caused this rush to T-bills? The following unsettling developm for this freeze: the bankruptcy of Lehman Brothers Holdings Inc., the absorption of Merrill L billion government bailout of the insurer American International Group Inc., and a money-m failed to maintain assets of at least $1 for every dollar its clients invested. Answer the following two questions. Question 1: Explain the negative yield curve. Question 2: Explain how the relationship between the bond market and the economy.
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 12E
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