Would a countries government bond yields over 10 years fluctuate with their real economies over 10...

Would a countries government bond yields over 10 years fluctuate with their real economies over 10 years? Would the government bond yield be associated to other macroeconomic indexes or events?

Expert Solution

Ans- country government bonds are those bonds which are issued by government of a country to fund government spending. These bond have maturity period of 3 months (91 days) to 40 years which pay periodic interest to bond holders over that period of time. Principle money is given at the time of maturity of bond.

Inflation- rising price of goods and services may result into higher interest rate of bonds and lower the value of investers bonds.

Deflation- deflation have positive result on bonds as they increase the value of the bond and lower it's interest rate. Deflation makes bond payment difficult as it becomes more expensive.

Government bond yeilds is directly associated with macroeconomics indicators such as real estate, GDP(gross domestic product), interest rate of banks and other financial institutions, fiscal policy etc. Price of real estate, equity and even price of commodities depends upon bond market. Bond market predicts the future economic activities like inflation, deflation in a country.

Rahul Sunny answered 7 months ago

Over the last 10 years, in Canada and the United States, corporate bond yields have fallen...

Over the last 10 years, in Canada and the United States, corporate bond yields have fallen (relative to previous time periods) to very low levels and during the same period both countries have experienced low rates of economic growth. Give two reasons to explain why bond yields in Canada and the U.S. have fallen to low levels over the last 10 years. Note: No diagram is needed to answer this question, you can provide your answer in words.

The 10-year Japanese Government Bond (JGB) yields 0.01%, while U.S. Treasury’s similar issuance yields 0.72%. It...

The 10-year Japanese Government Bond (JGB) yields 0.01%, while U.S. Treasury’s similar issuance yields 0.72%. It seems like the investors like the JGB so much that they are willing to accept close-to-zero interests when lending to the Japanese Government. Both the U.S. Treasury Department and the Japanese Government borrow in the currency they print. Why is the case that only the U.S. Treasuries are considered as the risk-free assets?

The GCC countries economies had been growing steadily over past years since the financial crisis of...

The GCC countries economies had been growing steadily over past years since the financial crisis of 2008 and their economies grew at 3,16% in 2016. a) how long will take to double their economic growth? b) explain what factors might influence Kuwait,s future rate of economic growth

Two countries have the same currency and central bank but their bond yields are different, what...

Two countries have the same currency and central bank but their bond yields are different, what is the cause of this?

You purchased a bond 10 years ago for $771. Today, the bond pays you $1000. Over...

You purchased a bond 10 years ago for $771. Today, the bond pays you $1000. Over the same period, overall inflation is 25%. The nominal rate of return for the bond is ________ percent. 2 decimal places answer please.

The Z Corporation issues a 10%, 20-year bond at a time when yields are 10%. The...

The Z Corporation issues a 10%, 20-year bond at a time when yields are 10%. The bond has a call provision that allows the corporation to force a bond holder to redeem his or her bond at face value plus 5%. After 5 years the corporation finds that the exercise of this call provision is advantageous. What can you deduce about the yield at that time? (Assume one coupon payment per year)

Bond Yields and Rates of Return A 30-year, 10% semiannual coupon bond with a par value...

Bond Yields and Rates of Return A 30-year, 10% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,100. The bond sells for $1,050. (Assume that the bond has just been issued.) What is the bond's yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. ----------% What is the bond's current yield? Do not round intermediate calculations. Round your answer to two decimal...

What does it mean if there were negative Yields to Maturity? How would countries respond in...

What does it mean if there were negative Yields to Maturity? How would countries respond in a time value of money context

Problem 5-3 Bond Yields Skolits Corp. issued 10-year bonds 2 years ago at a coupon rate...

Problem 5-3 Bond Yields Skolits Corp. issued 10-year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) YTM %

Given the following government bond yields: one-year, 2% and four-year, 9.5%. What is the two-year government...

Given the following government bond yields: one-year, 2% and four-year, 9.5%. What is the two-year government bond yield one would linearly interpolate from this information? 3.25% 4.50% 3.67% none of the above. A 15 year coupon bond, that makes payments annually, has a coupon rate of 5%. The market discount rate on the bond is 8%. If interest rates were to rise by 100 bps today, how long would it take before the reinvested coupon payments offset the capital loss?...

Question