You are a trading analyst at a financial planning firm in Sydney. In August 2021, you noticed the following data in the bond market. (a). While the yield on a 3-year bond increased over time, the yield on a 1-year bond and a 2- year bond decreases a bit. What does it imply to the yield on a 1 -year bond in 2023 ? (b). You believe that investors with different trading strategies and risk preference will stay in different markets. If you observe a sudden increase in the supply of a 1 -year bond how will it change the yield on this bond, if everything else remain unchanged?
You are a trading analyst at a financial planning firm in Sydney. In August 2021, you noticed the following data in the bond market. (a). While the yield on a 3-year bond increased over time, the yield on a 1-year bond and a 2- year bond decreases a bit. What does it imply to the yield on a 1 -year bond in 2023 ? (b). You believe that investors with different trading strategies and risk preference will stay in different markets. If you observe a sudden increase in the supply of a 1 -year bond how will it change the yield on this bond, if everything else remain unchanged?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You are a trading analyst at a financial planning
firm in Sydney. In August 2021 , you noticed the
following data in the bond market.
(a). While the yield on a 3-year bond increased
over time, the yield on a 1-year bond and a 2-
year bond decreases a bit. What does it imply to
the yield on a 1 -year bond in 2023 ?
(b). You believe that investors with different
trading strategies and risk preference will stay in
different markets. If you observe a sudden
increase in the supply of a 1 -year bond how will
it change the yield on this bond, if everything
else remain unchanged?
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