Respuesta :
- Interest rates rise as bond risk rises, and this is true regardless of whether one looks at liquidity preferences or the supply and demand for bonds.
- The demand bond declines as the bond's risk increases, which causes the demand curve to shift to the left. The leftward shift causes the bond price to decrease and the interest rate to increase.
- The high riskiness of the bond relative to money in the liquidity framework increases demand for money and moves the demand curve to the right, increasing the interest rate.
- As a result, both the liquidity preference framework and the supply and demand framework of bonds arrive to the same conclusion: interest rates rise as bond risk rises.
What are Interest rates?
- The amount of interest due each period expressed as a percentage of the amount lent, deposited, or borrowed is known as an interest rate.
- The total interest on a loaned or borrowed sum is determined by the principal amount, the interest rate, the frequency of compounding, and the period of time the loan or borrowing was made. The interest rate over a year is known as the annual interest rate.
- Other interest rates are applicable over shorter time frames, such a day or a month, but they are typically annualized.
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