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Business, 26.02.2020 05:50 Brendah7145

Related to the Solved Problem 4.3] According to an article in the Wall Street Journal in early 2016, "U. S. government bonds maturing in more than 25 years returned a negative 1.2% in the month through Thursday after chalking up a 8.7% gain between January and March. The reversal reflects a shift in financial markets' preoccupation from the prospect of a recession to the risk of higher inflation." Source: Min Zeng, "It Didn't Pay to Bet Against Inflation in April," Wall Street Journal, April 29, 2016 An increase in expected inflation will shift the demand curve equilibrium with a and the supply curve resulting in a new V price the nominal interest rate on both short-term and long-term bonds. The longer An increase in expected inflation will the maturity of a bond the ▼| the change in price as a result of a change in market interest rates. As a result, capital losses on long-term bonds will be V than capital losses on short-term bonds

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