BMC Answers (Bloomberg) 2023, Verified Answers

Knowledge Check 5 Which would you prefer?  A 5% annual yield on an investment in 10-year U.S. government bonds. SECTION QUIZ 1. What is the primary reason for U.S. government bond yield to ripple through the bond market? a. The large government bond market competes for investors’ attention via yields. 2. A rise in which of the following measures would typically send a government bond price up? a. Creditworthiness. 3. Which of the countries shown makes the greatest relative use of short -term government financing? a. Norway . 4. How do investors compare bonds? a. By comparing the yields of single bonds. Central Bankers and Interest Rates (25 min.) Knowledge Check 1 Which of the following is the strongest driver of inflation?  Wartime activities Knowledge Check 2 This chart shows the output gap in the US from 1949 to 1973. What is the output gap in 1973?  3% SECTION QUIZ 1. Here is a chart from the ILBE function displaying U.S. 10-year inflation expectations as of early 2017. At the point in time shown, where is the country’s 10 -year inflation expectation in relation to the Central Bank’s inflation target? a. 0.0239% above 2. Investors who fear rising inflation may buy Treasury Inflation Protected Securities (TIPS). How do TIPS shield lenders from inflation? a. By compensating investors for inflation. 3. What is the Federal Reserve’s favorite inflation gauge? a. Core PCE 4. Here is the output gap in the U.S. in early 1975. What was likely the Fed interest rate policy? a. To cut interest rates. The Yield Curve and Why It Matters (15 min.) Knowledge Check 1 Why does the yield curve naturally slope upwards?  To compensate lenders for the greater risk of long-term loans compared to short-term loans.