Reference no: EM132403347

As a personal financial planner, one of your tasks is to prescribe the allocation of available funds across money market securities, bonds, and mortgages. Your philosophy is to take positions in securities that will benefit most from your forecasted changes in economic conditions. As a result of a recent event in Singapore, you expect that in the next month investors in Singapore will reduce their investment in U.S. Treasury securities and shift most of their funds into Singapore securities. You expect that this shift in funds will persist for at least a few years. You believe this single event will have a major effect on economic factors in the U.S., such as interest rates, exchange rates, and economic growth in the next month. Because the prices of securities in the U.S. are affected by these economic factors, you must determine how to revise your prescribed allocation of funds across securities.

• Will U.S. interest rates increase or decrease?
• Will  U.S. bond prices increase or decrease?
• As the portfolio manager, what advice would you provide to your financial planning clients? Should they maintain their current positions, or should they make changes?