Are negative real yields on Treasurys expected to change in the near future?

Expert Solution

No, negative real yield on treasuries are not expected to change in the near future because it has been seen that Federal Reserve has a stance that they are going to keep the interest rates into the economy at almost zero level for a longer period of time, and since there will be a zero level of interest rate, it will be helping the economy in order to stimulate the demand and it can be seen that there is a revival in the economy even it is a slow recovery and it can be reflected upon the stock prices that are swinging wildly on the upside, so there will be a growth in inflation continuously.

Hence, it will be expected that the rate of inflation will be higher than the rate of nominal interest rate in the economy and it would be leading into a real negative yield for a longer period of time which is currently visible in the American economy so it will be leading to a negative real yield for a longer period of time because of the stance of the Federal Reserve.

jeff jeffy answered 1 year ago

Charlene Hickman expected the price of Bio International shares to drop in the near future in...

Charlene Hickman expected the price of Bio International shares to drop in the near future in response to the expected failure of its new drug to pass FDA tests. As a result, she sold short 100 shares of Bio International at $26.91. How much would Charlene earn or lose on this transaction if she repurchased the 100 shares four months later at each of the following prices per share? a.$23.95 b.$24.62 c.$31.14 d. $26.63 a. The amount Charlene would earn...

How and why are concentrations of stratospheric ozone expected to change in the future?

Suppose current income increases for consumers, but there is no change in expected future income. Describe...

Suppose current income increases for consumers, but there is no change in expected future income. Describe and illustrate the impact on current consumption, future consumption, and savings. If any of these effects are indeterminate, explain why.

how do negative real yields affect investors' appetite for other, more risky assets/investments? List at least...

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.

Give real life examples of positive and negative resistance to change? Can use studies to show...

Give real life examples of positive and negative resistance to change? Can use studies to show this or real life example of companies

If expected inflation increases, investors will consider selling bonds as the real value of this investment will decrease and bond yields should increase.

Which of the following are correct?I. If expected inflation increases, investors will consider selling bonds as the real value of this investment will decrease and bond yields should increase.II. Reinvestment risk occurs when interest rates decrease so that coupons from a bond are reinvested at a lower rate than originally expected.III. If interest rates are expected to increase, an investor should consider selling long-maturity bonds and buying short-maturity bonds to decrease portfolio duration.IV. If the risk of default on a...

a) What is realized real interest rate? Can a change in expected inflation rate affect the...

a) What is realized real interest rate? Can a change in expected inflation rate affect the realized real interest rate? Explain.

In the foreign exchange market, how does a change in expected future U.S. exchange rate affect...

In the foreign exchange market, how does a change in expected future U.S. exchange rate affect the demand for dollars? If the Fed wants to close a recessionary gap, should it buy or sell government securities? Explain why? "As the economy moves upward along its aggregate supply curve, the economy also moves upward along its short-run Phillips curve." Is the previous statement correct or incorrect? Briefly explain your answer.

Based on current dividend yields and expected capital gains, the expected return on portfolios A and...

Based on current dividend yields and expected capital gains, the expected return on portfolios A and B are 11% and 14% respectively. The beta of A is 0.8 while that of B is 1.5. The rate of exchange fund bill is currently 6%, while the expected return of the Hang Seng Index is 12%. The standard deviation of portfolio A is 10%, while that of B is 31%, and that of the index is 20%. a. If you currently hold...

A firm that is looking to raise capital in the near future. To prepare for potential...

A firm that is looking to raise capital in the near future. To prepare for potential investors, you determined that you need the WACC of your firm. Your firm is currently structured in such a way that the debt-to-equity ratio is 0.4. 1. Since the company size is comparable with publicly traded micro-cap companies, you started analyzing the Wilshire Micro-Cap ETF, which represents a basket of micro-cap US companies. The current price of this EFT is $29.97. At inception 6.25...

Question