FRONT PAGE Treasury Prices Rise on Recession Fear Increasing fears of a recession next year brought bond yields down dramatically in August. The yield on the Treasury's 1.75 percent 10-year bond fell from 2.0 percent at the beginning of August to 1.5 percent at month's end. In the process, the price of the 10-year bond rose from $875 to S1.167 Market analysts say that impending tariff hikes, the president's impeachment in the House, and lackluster manufacturing data have intensified fears of a recession. Source: Market reports of September 2019. What would the yield be on a 1.75 percent, $1,000, 10-year Treasury bond if the market price of the bonds were Instructions: Round your responses to two decimal places. a. $1,075? 1.7 b. $900? 2.258 % C. $1,250? 1489

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

8t

FRONT PAGE
Treasury Prices Rise on Recession Fear
Increasing fears of a recession next year brought bond yields down dramatically in
August. The yield on the Treasury's 1.75 percent 10-year bond fell from 2.0
percent at the beginning of August to 1.5 percent at month's end In the process,
the price of the 10-year bond rose from $875 to S1,167 Market analysts say that
impending tariff hikes, the president's impeachment in the House, and lackluster
manufacturing data have intensified fears of a recession,
Source: Market reports of September 2019.
What would the yield be on a 1.75 percent, $1,000, 10-year Treasury bond if the market price of the bonds were
Instructions: Round your responses to two decimal places.
a. $1,075?
17
b. $900?
2.258
C. $1,250?
1489
Transcribed Image Text:FRONT PAGE Treasury Prices Rise on Recession Fear Increasing fears of a recession next year brought bond yields down dramatically in August. The yield on the Treasury's 1.75 percent 10-year bond fell from 2.0 percent at the beginning of August to 1.5 percent at month's end In the process, the price of the 10-year bond rose from $875 to S1,167 Market analysts say that impending tariff hikes, the president's impeachment in the House, and lackluster manufacturing data have intensified fears of a recession, Source: Market reports of September 2019. What would the yield be on a 1.75 percent, $1,000, 10-year Treasury bond if the market price of the bonds were Instructions: Round your responses to two decimal places. a. $1,075? 17 b. $900? 2.258 C. $1,250? 1489
WORLD VIEW
China Cuts Reserve Requirements
The People's Bank of China (PBOC) has cut the reserve requirement for small
and medium-sized banks. The cut from 7 percent to 6 percent will free up 400
billion yuan ($56 billion) in reserves for the country's 4,000 affected banks, many
of which serve rural areas. The reserve cuts are seen as another response to the
economic calamity caused by the coronavirus pandemic. Economic lockdowns in
China and around the world have hit Chinese exports hard, with GDP stalling
and unemployment rising. The PBOC's cuts are intended to encourage more
lending and borrowing, especially among smaller enterprises.
Source: News reports, April 5-8, 2020.
By how much did the following increase when China cut the reserve requirement:
Instructions: Enter your responses as a whole number. Also note that answer responses are in U.S. dollars (not yuan).
a. Excess reserves?
24
16 billion
b. The lending capacity of the banking system?
16 billion
%24
Transcribed Image Text:WORLD VIEW China Cuts Reserve Requirements The People's Bank of China (PBOC) has cut the reserve requirement for small and medium-sized banks. The cut from 7 percent to 6 percent will free up 400 billion yuan ($56 billion) in reserves for the country's 4,000 affected banks, many of which serve rural areas. The reserve cuts are seen as another response to the economic calamity caused by the coronavirus pandemic. Economic lockdowns in China and around the world have hit Chinese exports hard, with GDP stalling and unemployment rising. The PBOC's cuts are intended to encourage more lending and borrowing, especially among smaller enterprises. Source: News reports, April 5-8, 2020. By how much did the following increase when China cut the reserve requirement: Instructions: Enter your responses as a whole number. Also note that answer responses are in U.S. dollars (not yuan). a. Excess reserves? 24 16 billion b. The lending capacity of the banking system? 16 billion %24
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Arrow's Impossibility Theorem
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education