Question

how do negative real yields affect investors' appetite for other, more risky assets/investments? List at least two examples of other risky assets/investments and describe how negative real yields may have affected investors' appetite for these types of investments.

Answer 1

Negative real yield will mean that when the real yield will be calculated after deducting inflation from the nominal yield and when it will be negative,it will mean that investor are buying for the bonds as they are preferring in investment in other assets because when they are even ready to accept negative yield for the short period of time because they want to get secured about principal repayment at the end as they are looking for safe haven assets so other risky assets are are going to fall very much because they are not opening with the required rate of return and they are expected to go down heavily except for a few safer one assets like gold and silver

Two types of high risk investment are STOCKS which has been in completely affected on the negative side by negative real yield because there has been a lack of interest of investment into the stocks by various investors because they are fearing that stocks are going to crash to lower levels because there has been a risk related to high resolution.

CRYPTOCURRENCY are another highly volatile and high risk investment which has also fallen significantly from their highs when there was real negative held as investor were highly sceptical for investment into the securities because they are fearing that there is a risk related to an impending recession which is going to affect the economy at the large so these securities had lost a significant chunk of their valuation.