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Money&Banking - Book Report/Review Example

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There exist various articles in macroeconomics that addresses various interesting issues concerning the effects of interest rate, banks and economic performances. The wall street journal: Fed Is Pushing and Pulling on Rates Riddle by Min Zeng is an example of such an article…
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Download file to see previous pages Min Zeng uses his long time experience of analysis of money market and capital to provide factual argument that anyone vast in knowledge of interest rate can agree with.
The article begins by pointing out the challenge that the Fed faces in presiding over a rise in their short-term interest rates. The objective of this action was to avoid fueling economic market bubbles. The article also goes ahead to point out the worry that the central bank will have and challenges in nudging the long term rates up. The reasons are based on the basis that the Central Bank is charged with various duties vital among them is regulating other banks so as to stabilize the economy, and they do this through different instruments. All these actions and many others are in consideration of how the investors would react and how they will perceive economic performance. The article argues so through the analysis of the Treasury Yield Curve. Finally, the article gives the possible ways the banks would react to the news and various scenarios that favor them.
Through critical analysis, the article has offered a clear insight into The Treasury Yield Curve projections, which can also be referred to as the term structure of interest rates. This has been clearly illustrated through the comical draws out a line chart to show a relationship between yields and maturities of Treasury fixed income securities. Yield Curves are also critical in deriving Yield to Maturity for particular concerns and play a significant role in credit modeling, including bond valuation, bootstrapping and risk and rating assessment which the article insinuates to be very vital. The curve shows the link between the interest rate or cost of participants borrowing and the period to maturity. The article also supports the fact that many investors and market participants’ focuses on the yield curves, as they are essential for deriving the interest rates. One can agree ...Download file to see next pagesRead More
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