Recent disappointing U.S. macroeconomic news should have done the following to the U.S. Treasury bond market,...
Recent disappointing U.S. macroeconomic news should have done the following to the U.S. Treasury bond market, according to theory:
| a | Raised Treasury bond yields and lowered Treasury bond prices |
| b | Raised Treasury bond yields and raised Treasury bond prices |
| c | Lowered Treasury bond yields and raised Treasury bond prices |
| d | Lowered Treasury bond yields and lowered Treasury bond prices |
| e | Raised Treasury bond yields and led to no effect on Treasury bond prices |
Homework Answers
Recent disappointing U.S. macroeconomic news should have Lowered Treasury bond yields and raised Treasury bond prices. This is because, as the economy is not in a strong position, so the Federal Reserve is likely to have reduced interest rate to stimulate investment demand in the economy. As a result, interest rate is likely to have declined while treasury bond prices are likely to have increased.
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