Describe the concept of flight to quality in terms of the Russian government default of August 1998.
What will be an ideal response?
The concept of flight to quality implies that during any economic downturn or turmoil in financial markets, investors (savers) will seek out high quality bonds and shun low quality bonds. This can have very significant impacts on the prices and yields of high and low quality bonds, adding to the volatility of financial markets. This was certainly what was observed when the Russia government defaulted.
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Refer to the Article Summary. Colorado taxes marijuana with a 12.9% sales tax on buyers and a 15% wholesale excise tax on producers, or a total tax of 27.9%
Suppose the actual burden of the tax falls 80 percent on consumers and 20 percent on producers. In this case, consumers will actually bear the tax burden of about ________ percent of the selling price and producers will actually bear the tax burden of ________ percent of the selling price. A) 80; 20 B) 13; 15 C) 46; 54 D) 22; 6
Commercial paper has a minimum maturity of
A) one day. B) seven days. C) 30 days. D) 270 days.
A mathematical formula for the deficit would be
a. C + I + G ? Transfers + Taxes b. C + I + G + Transfers ? Taxes c. I + G + Transfers ? Taxes d. G + Transfers ? Taxes
When the coupon rate on newly issued bonds decreases from 6 percent to 5 percent, the prices of existing bonds:
A. remain unchanged. B. decrease only if the coupon rate is less than 5 percent. C. decrease. D. increase.