IvanRivera6-Unit5-Bond Pricing and Mortgage Markets

IvanRivera6-Unit5-Bond Pricing and Mortgage Markets - Bond...

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Bond Pricing and Mortgage Markets Unit 5, MT481 Financial Markets Prof: D. Weaver By Ivan Rivera Chapter 8: Questions and Applications: q. 3, 4, 5, and 14, page 193. 3. Relevance of Bond Price Movements Why is the relationship between interest rates and bond prices important to financial institutions? Most bank and financial institutions are involved in investments themselves and would have to see when it is time to sell their portfolios to other bank or investment groups and free up some of their cash flow. 4. Source of Bond Price Movements Determine the direction of bond prices over the last year and explain the reason for it. The bond prices have gone up in the past year because interest rates have maintained a low percentage and the unemployment, the down housing as well as the other countries have made it where interest rates will still be low keeping many bonds also moving up or fluctuating at higher amount. 5. Exposure to Bond Price Movements How would a financial institution with a large
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This note was uploaded on 09/22/2011 for the course BUS MT400 taught by Professor Weaver during the Spring '11 term at Kaplan University.

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IvanRivera6-Unit5-Bond Pricing and Mortgage Markets - Bond...

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