Discussion:
1. What is meant by the term "market equilibrium", and why is this important within the study of supply and demand for the Bond Market? Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, should be referenced; paraphrased and quoted material should have accompanying citations.
2. What are the four types of credit market instruments? Explain them in detail. Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, should be referenced; paraphrased and quoted material should have accompanying citations.
3. What are the differences between real and nominal rates? Explain why this is important to induce action on the part of borrowers and lenders? Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, should be referenced; paraphrased and quoted material should have accompanying citations.
4. If Wilma borrows $5,000 from her brother (at 5% interest per year) and the loan matures in 10 years, how much will she have to pay annually to pay the loan off in 10 years? How much will she have to pay annually to pay the loan off in four years? (Show all work/calculations/formulas. You may use a financial calculator, but should identify your methodology.) Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, should be referenced; paraphrased and quoted material should have accompanying citations.
5. How will the interest rate of Treasuries compare to that of corporate bonds if the government issues a guarantee against corporate bankruptcy?