Reference no: EM131952016
Assignment: Determination of Interest Rates
Prior to beginning work on this assignment, read Hubbard and O'Brien's (2017) Chapters 3 and 4. Choice Financial is a financial services firm based in San Diego, California. In early 2018, Tom Jones, a financial analyst for the firm, predicted that the inflation rate would go up from 1.5% in 2018 to 6% in 2020. He advised investors not to buy bonds because their prices would fall as inflation increased.
• Explain why bond prices fall when inflation increases.
• Analyze the relationship between the price of bonds and interest rates.
• Appraise how interest rates are determined using the following models and whether the different models produce different results in determination of interest rates:
o Demand and Supply
o Bond Market
o Money Market
• Evaluate how each of the following affects interest rates and the price of bonds:
o Yield to Maturity
o Bond Yields
o Risk
The Determination of Interest Rates paper
• Must be three to four double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center.
• Must include a separate title page with the following:
o Title of paper
o Student's name
o Course name and number
o Instructor's name
o Date submitted
• Must use at least three scholarly, peer-reviewed, and/or other credible sources in addition to the course text.
o The Scholarly, Peer Reviewed, and Other Credible Sources table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
• Must document all sources in APA style as outlined in the Ashford Writing Center.
• Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.