“Investment Decision- Bonds” and “Investment Decisions- Mortgages”
From the e-Activity Part 1, based on your review of the government and municipality bond price / yield rate, determine the type of investor that is most likely to be attracted to government bonds with a short-term versus a long-term date to maturity. Provide support for rationale. (Go to Bloomberg’s bond site at http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ and review the bond price/yield rate for government and municipalities. Be prepared to discuss. ) Go to Bloomberg’s Website related to key-market rates at http://www.bloomberg.com/markets/rates-bonds/key-rates/ and review the mortgage rates (national average) trends over the past year. Be prepared to discuss.
Evaluate the risk and reward proposition for an investor considering purchasing a government versus corporate bond, indicating the key factors to be considered to determine the investor level of risk tolerance and the impact to his decision.
New regulatory requirement imposed on banks and financial institutions may have impacted a bank’s ability to generate mortgages for home buyers by increased requirements for disclosures, notices, statements, and documents related to lending. Evaluate the pros and cons of increased regulatory requirement, indicating the impact to the lender and the buyer. Provide support for your answer.
Based on your review of the mortgage rate trends, predict the future (within a year) rate of the 30-year fixed and the 15-year fixed rate mortgage, indicating the basis and rationale of your prediction, and the resulting impact to the mortgage industry.