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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

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

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 18CQ
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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
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