24. DISCUSSION 1: As we have learned from the readings, there is an inverse relationship between bond prices and interest rates. Given the current economic situation and the forecast of interest rates, would you invest in bonds? Why or why not?
Be sure to rely on sources and cite your references in APA format.
DISCUSSION 2: It can be said that the mortgage market was at the center of the Credit Crisis of 2008. The emergence of subprime loans and the demand for subprime loans caused the creation of new financial products.
Describe how Mortgage-Backed Securities (MBS) were used throughout the Credit Crisis and compare their use then to their use today. For example, do you believe MBS’s are riskier than people thought?
AT LEAST 200 WORDS EACH.
Prices for bonds tend to fall when interest rates rise. Prices for bonds are generally lower as interest rates increase and increase or fall. The opposite relationship between rates of interest and bond prices is a bit baffling initially. However, when you consider it, it’s a perfect sense (Agliardi and Agliardi 2019). Bond investors, as investors in any other field generally seek to maximize their chance of earning (Maltais Nykvist and Maltais, 2020). This means that they have to be aware of the fluctuating rate at which they can take out loans to be successful. The zero-coupon bond, which do not pay interest on a monthly basis however, they derive its value through the gap between the purchase price in addition to the principle amount that is due at the time of maturity, is an easy explanation of how bonds’ prices fluctuate in the opposite direction to yields for bonds (Agliardi and Agliardi, 2019). I am a sucker for bonds as an investment since they give me a steady return on my investment. The majority of bonds come with the option of a semiannual interest schedule. Bonds are a kind of investment that will allow you to save cash due because you can earn your initial investment back when you keep bonds until they is mature. Bonds are an insurance policy against the risk of equity investments. Cont…
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