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Explain the factors that cause a shift in the bonds demand curve

Explain the factors that cause a shift in the bonds demand curve

Answers

Dana
Expected inflation: inflation negatively affects the prices of bonds. A fall in inflation increases the prices of bonds
Risk to alternatives: if a bond becomes less risky relative to alternative investments, the bond curve shifts to the right
Liquidity relative to alternatives: investors will require the more liquid asset
Expected return relative to alternatives: if the return on the bonds rises relative to other alternatives, the demand for bonds increases
Expected interest rate: the higher the interest rate, the lower the price of the bonds hence the higher the demand
Dana05 answered the question on July 18, 2019 at 19:28

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