Explain the effects of the situation on the nominal interest

Assignment Help Financial Management

Reference no: EM132005545

Suppose that discount brokers make bonds more liquid, in the sense that it becomes quick and inexpensive to sell bonds.

A. Using an appropriate diagram, illustrate and explain the effects of this situation on the nominal interest rate in the economy.

B. Suppose that the Fed becomes concerned regarding the nominal interest rate change that occurs in part A of this situation. What should the Fed do if it does not want any change in the nominal interest rate in the economy? Explain carefully!

Reference no: EM132005545

Questions Cloud

Fluvial transport or from fluvial transport : Does channel initiation mark the transition from hill slope transport -fluvial transport or from fluvial transport- hill slope transport?

Primarily of visible light and infrared wavelengths : 1 The Sun's radiant energy is composed primarily of visible light and infrared wavelengths. True or False

Describe the strategy and compute the arbitrage profit : Is there any arbitrage opportunity? Describe the strategy and compute the arbitrage profit.

Discuss the reasons behind levels of economic development : Discuss the reasons behind levels of economic development in China varying significantly between coastal areas as compared to more inland areas of China?

Explain the effects of the situation on the nominal interest : Using an appropriate diagram, illustrate and explain the effects of this situation on the nominal interest rate in the economy.

Formation of a hurricane-tornado and thunderstorms : What are some of the atmospheric conditions that needed for the formation of a hurricane, tornado, and thunderstorms.

Find the expected share price at the end of 2014 : Suppose the dividends for the Seger Corporation over the past six years were $1.19, $1.27, $1.36, $1.44, $1.54, and $1.59, respectively.

What is the systematic risk of the stock return : The firm announced that its market share had unexpectedly increased from 27 percent to 31 percent.

What apparent long-term effects on the earth : What apparent long-term effects on the Earth's atmosphere can be attributed to modern technology?

User Account

All Pages