Statement with other theories of general interest rates

Reference no: EM13932980

The Liquidity Preference Theory states the rate of interest is not the reward for saving but for parting with (lending) liquidity.Critically evaluate this statement with other theories of general interest rates.

No need introduction and conclusion -just need content in essay form -need in-text citation by using Harvard reference -this assignment is academic essay, weighing the arguments for and against each issue, making comment on the literature and drawing logical conclusions. Referencing is a key requirement of the assignment to demonstrate wider reading and to underpin the discussions, ensuring they have sufficient depth. -Question and additional file i already upload, so just follow what question need.

Capital gain: The increase in market value of a bond asset due to a fall in interest rates.
Capital loss: The reduction in market value of a bond asset due to a rise in interest rates.
If investors expect interest rates to rise they may sell current bond assets to avoid capital loss and hold cash until interest rates increase. The higher the interest rates the greater the opportunity cost of holding cash.
If investors expect interest rates to fall they will hold on to bonds as they will benefit from capital gains.

Reference no: EM13932980

Questions Cloud

Create a calculator application. : You must center the form on the screen.

Uses cost-plus pricing-what price should the company charge : The Estrada Company uses cost-plus pricing with a 0.42 markup. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $3.80. In addition, the company incurs $179,700 in fixed costs annually. If demand falls t..

Effects of estimation error on apparent arbitrage : This question explores the effects of estimation error on apparent arbitrage opportunities in a controlled simulation setting. We simulate returns for N = 20 assets over T = 15 years.

Dividends are expected to grow at rate : Red-Blue Co. is growing quickly. Dividends are expected to grow at a rate of 24% for the next three years, with the growth rate falling off to the constant 6% per year indefinitely. If the required return is 11%, and the company just paid a dividend ..

Statement with other theories of general interest rates : The Liquidity Preference Theory states the rate of interest is not the reward for saving but for parting with (lending) liquidity.Critically evaluate this statement with other theories of general interest rates.

Assumptions that underlie your perspective and position : Do you identify and assess the key assumptions that underlie your perspective and position? (e.g., do you talk about how you arrived at your theory or do you simply state your conclusions?)

How to maintain the loyalty of customer to the company : Discuss the role of social media in relationship marketing. Use theory and examples to demonstrate you understanding. What is social media? The importance of social media? How to maintain the loyalty of customer to the company

Add a new parts record and delete an existing parts record : Add a new parts record, delete an existing parts record, and update an existing parts record.

Time value of money-interest rates : Ted Ltd is entitled to receive a cash inflow of $80,000 in 2 years' time and a further cash inflow of $14,000 in 5 years' time (in year 5). If the interest rate is 8.5% per annum, how much is this stream of cash inflows worth:

User Account

All Pages