CSUSM The Bond Market and The Housing Market Yield Curve Question
- The yield curve is currently upward sloping.Does it follow that the market currently believes that future short-term interest rates will be rising?Explain your answer.Both a numerical example and a graph will help in answering this question.
- “The bond market and the housing market are similar in some respects.Specifically, in equilibrium it could very well be said that no house and no bond is any better than any other house and any other bond once all factors have been taken into consideration.”Do you agree with this statement?Explain and diagrammatically (especially with respect to the bond market) represent your answer.