Archive for the ‘Economics’ Category

Why does China buying USA bonds therefore peg the yuan to dollar exchange rate as low and stabilise the ER ?

Wednesday, April 7th, 2010
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awindsor200 asked:

I am not an economist. If the USA runs up debt serviced by bonds, at present China buys the debt as bonds, gilts etc. This sounds ominous. This encourages US debt and keeps bond yields low, as they can easily find a buyer at present ? Surely it can all go horribly wrong if China, amongst others, stop buying ? My real question is why do they buy up US debt? What is the advantage for China in terms of dollar yuan exchange rates ?

convertible bonds

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How can an increase in the interest rate make bonds more attractive and reduce their price?

Sunday, March 7th, 2010
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chocosonge asked:

The Demand for bonds
an increase in the interest rate makes bonds more attractive, so its leads people to hold more of their wealth in bonds, as opposed to money.
However, you also learned that an increase in the interest rate reduced the price of bonds.
How can an increase in the interest rate make bonds more attractive and reduce their price?

convertible bonds

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