neihasanchez1615 neihasanchez1615

28-08-2020
Business

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Suppose the U.S. Treasury announces plans to issue $50 billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?

Respuesta :

Tundexi Tundexi

01-09-2020

Answer:

Prices would decline and interest rates would rise

Explanation:

This is because the market will be flooded with additional 50 billion dollars of bond increasing the supply causing the price to fall. Interest rate are inversely proportional to prices thus interest rate will rise.

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