Question

This week's graded discussion forum requires students to demonstrate their understanding of market interest rates and the impact of interest rates on marketable securities. Marketable securities include low-interest return investments such as money market deposits and certificate of deposits, debt securities (bonds) with fixed coupon rate but fluctuating yields, and equity investments. To prepare for this assignment, students are to study the chapter readings and conduct additional research to prepare a short analysis posting of 400 words (min). See the description in Week 1 Readings for selection criteria for your article. The primary focus of the selected article must be specific to U.S. interest rates within the last 12 months.

In your analysis piece, synthesize the primary point(s) of your selected article with a minimum of two concepts presented in the required chapter readings (1, 2, and 3). In your analysis piece you are to describe and address each of the following:

1. Why is your article relevant? Articulate the reasons for relevancy.
2. What are the relationship(s) between the chapter concept(s) and your article and analyze the relationship(s)?
3. What is the impact of the relationship to the investment policy of the firm, and/or individual investor?

Students must include the hyperlink to the selected article. If the hyperlink or site is not accessible to non-subscriber, students are to post the article as a pdf file in the discussion post. Be sure the pdf includes articles date of publication and source.

Answer 1

ANSWER

Interest rate can have positive as well as the negative impacts on the marketable securities.When the Fed changes the rate at which banks borrow money, this has a ripple effects the entire economy. Interest rate has positive relationships with the money market deposits. As interest rate gets higher the money increases and vice versa. When we open new CD (Certificate of Deposits) We can have a high interest rate. This also has positive relationships with the interest rate.. Interest rate also affect bond prices. There is an negative relationship between bond prices and interest rates. As interest rate gets high bonds price lowers and vice versa.Higher interest rate tends to make economic growth slower and makes the pressure of inflation stronger. A decrease ini will prompt investors to move money from the bond market to the equity market.