Interest rate movements have a direct influence on the market values of debt securities, such as money market securities

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Interest Rate Movements Have A Direct Influence On The Market Values Of Debt Securities Such As Money Market Securities 1 (53.39 KiB) Viewed 32 times

Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Interest rate movements also affect the value of most financial institutions. They affect the cost of funds to depository institutions and the interest received on some loans by financial institutions. a. Wars tend to cause significant reactions in financial markets. Why might a war in the Middle East place upward pressure on US interest rates? Why might some investors expect a war like this to place downward pressure on US interest rates? b. Explain how interest rate movements influence prices of debt securities. C. Assume that Singapore has a very strong economy, putting upward pressure on both its inflation and interest rates. Explain how these conditions could put pressure on the value of Singapore dollar and determine whether the dollar's value will rise or fall.