a) Interest rates have plunged following the monetary response to the COVID-19 economic crisis similar to the 2008 economic crisis. This policy change or response is certainly expected to affect investment portfolios, even the ones without any bond market exposure. As it is well-known fact that interest rates deeply influence economic and financial activities, capital flows, and retirement planning. • What do you expect regarding this monetary response and low interest rates impact on the capital/equity market? Discuss lengthy. • In reaction to the Covid-19 pandemic, the Federal Reserve as well other central banks implemented a thorough and comprehensive action plan to fuel the growth and stabilize financial markets. It can be said that the most noticeable element of the plans was zero interest rate policy. Needless to say that this is a monetary policy instrument that decreases the cost of capital in the system. It is argued that this zero interest rate policy is required and justified during the current economic downturn. The consequential lower interest comes at the expense of savers. It looks like that zero interest rate policy will have a long-term effect on the economic cycle and cash investors. Analyze whether or not zero interest rate policy works, and whether or not the rates can go negative and what the options available to liquidity investors.
a) Interest rates have plunged following the monetary response to the COVID-19 economic crisis similar to the 2008 economic crisis. This policy change or response is certainly expected to affect investment portfolios, even the ones without any bond market exposure. As it is well-known fact that interest rates deeply influence economic and financial activities, capital flows, and retirement planning.
• What do you expect regarding this monetary response and low interest rates impact on the capital/equity market? Discuss lengthy.
• In reaction to the Covid-19 pandemic, the Federal Reserve as well other central banks implemented a thorough and comprehensive action plan to fuel the growth and stabilize financial markets. It can be said that the most noticeable element of the plans was zero interest rate policy. Needless to say that this is a
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