Financial Markets: US Government
Final assignment:
- Please explain how US government gets its finance, what is the relationship with the Federal Reserve, what instruments does the government use to transfer the money to the US citizens?
- On 12/04/01 consider a fixed-coupon bond whose features are the following:
- face value: $1,000
- coupon rate: 8%
- coupon frequency: semiannual
- maturity: 05/06/04
What are the future cash flows delivered by this bond?
- Discuss potential risk of the corporate bond vs government bond.
- Why investors want to invest in negative government bonds? What is the origin of negative government bonds?
- Does a greater risk imply a bad investment? Give me some examples.
- What are the four main uses of interest-rate swaps?
- What is a credit default-swap?
Outcome: Interest Rates / Stocks, Stock Markets, and Market Efficiency
Formalities:
- Wordcounts: 1500-2000 words.
- Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
- Font: Arial 12,5 pts.
- Text alignment: Justified.
- The in-text References and the Bibliography have to be in Harvard’s citation style.