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Question: Suppose that many big corporations decide not to issue bonds, since it is now too costly to comply with new financial market regulations. Can you describe the expected effect on interest rates? Illustrate your answer with a diagram.
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- To determine how U.S. interest rates reacted to this announcement, use the FRED database at thelink referenced above and choose the weekly format. a.) Adjust the graph to see what happened to the interest rate in the week including May 16,1995. How does this movement in the interest rate compare with neighboring weeks,specifically the preceding week and the subsequent week? In your answer to thisquestion, please include a copy of the graph. b.) What type of retaliation by the government of Japan for the proposed tariff canexplain this change in interest rates? Explain why Japanese retaliation would result inthis change in interest rates. c.) About one month later, President Clinton announced that the two countries had reachedan agreement, which ended the threat of the tariffs being imposed. What happened to the interest rates during the month of June? In your answer to this question, pleaseinclude a copy of the graph. Please explain why averting a trade war would have thiseffect on the…Discuss the other types forecasting methods that financial analyst use to predict future revenues.What effect will a sudden increase in the volatility of gold prices have on interest rates? Explain your answer with a graph.
- Question 2 "Financial intermediaries are institutions that borrow funds from savers and lend them to borrowers, providing risk sharing, liquidity and information services in the process." If these are some of the functions of financial institutions, how do you explain the impact of these functions on: 1. İnvestor's decisions 2. The economy 3. Financial markets Question 3 How the following events affect interest rates? Be clear in your answer. 1. An earthquake destroys bridges and roads in Turkey, leading to increased investment spending for rebuilding the infrastructure. 2. Future taxes of businesses are expected to be increased. 3. Corona pandemic is forcing people to stay home to protect themselves and spend less money than usual. 4. The government proposes a new tax on savings.Identify the effect of recession in the economy on either demand or supply curve and the equilibrium interest rates. kindly use a graph in your explanation.Suppose there is an increase in the interest rate in the financial markets. What effect will this have on income? Use a diagram to support your answer.
- QUESTION 8 Assets Liabilities A = $100 m L = $90 m E = $10 m %3D Assume that the average duration of assets is 9 while the average duration of liabilities is 3 years. You are the liability manager of the bank and your boss is unhappy about the interest rate risk. How should you change the duration of the liability side to eliminate all interest rate risk? Provide your answer by calculating the new liability duration with two decimals.What will happen in the bond market if the government imposes a limit on the amount of daily transactions? Which characteristic of an asset would be affected? How might it affect the interest rates. Explain with a graph.Describe how interest could be good or bad, depending on the situation, and explain why interest rates are currently so low?
- Why does longer-term bonds fluctuate more when interest rate change, than does shorter-term bondsdiscuss the relationship between the coupon rate, the market rate of interest and the price of bond?As the treasurer of a manufacturing company, your task is to forecast the direction of interest rates. Your company plans to borrow funds and it may use the forecasting of interest rates to determine whether it should obtain a loan with a fixed or floating interest rate. The following information can be considered when assessing the future direction of interest rates:▪ Economic growth has been high over the last two years, but it is expected that it will be stagnant over the next year.▪ Inflation has been 3 percent over each of the last few years, and it is expected that it will be about the same over the next year.▪ The federal government has announced major cuts in its spending, which should have a major impact on the budget deficit.▪ The Central Bank is not expected to affect the existing supply of loanable funds over the next year.▪ The overall level of savings by households is not expected to change. (c) Assume that Singaporean interest rates have abruptly risen just as you have…