Corporate Bond Market to Serve as A Spare Tire Question

Need help with my Economics question – I’m studying for my class.

1. What does it mean for a corporate bond market to serve as a “spare tire”?

2. What is the source of moral hazard in the business model of the major international credit rating agencies?

3. Why are money markets often called “friends” of central banks?

4. In a price-discriminatory auction of government bonds, what is the “winner’s curse”?

5. What is a de jure benchmark bond?

6. How does a central-bank-watching government bond market react to the release of an important macroeconomic announcement, such as the U.S. nonfarm payroll number?

7. Why is the Manufacturing Purchasing Managers’ Index (PMI) an important announcement in many government bond markets?

8. What was the LIBOR scandal of 2008 about?

9. What is a tri-party repo market?

10. What is a possible reason why stock prices in some stock markets react to quarterly earnings announcements while stock prices in other stock markets don’t?

11. What happened to global stock markets on October 19, 1987?

12. According to BIS data, which currency dominates foreign exchange transactions?

13. What is the currency regime of the Australian dollar and the New Zealand dollar?

14. In foreign-exchange markets, what is a “carry trade”?

15. What is the main difference between derivatives that trade on an exchange and derivatives that trade over-the-counter (OTC)?

16. What is a non-deliverable forward (NDF)?

17. What kind of derivative led to the collapse of AIG Financial Products in London in 2008?

18. Money serves three functions in an economy: a) as a medium of exchange; b) as a unit of account; and c) as a store of value. Which of these functions, if any, would Bitcoin be suitable to serve?

19. What international institutions typically provide the certification for a green bond?

20. What is a Samurai bond?


Choose one market from among these seven:

1) money market;

2) government bond market;

3) corporate bond market;

4) equity market;

5) currency market;

6) derivatives market; or

7) cryptocurrency market.

Write an essay to characterize your chosen market in Japan in terms of some of the following aspects:

a) Why the market would be of interest to central banks;

b) What tends to drive prices in the market; and

c) What challenges would the market face if it was to function well in an emerging economy.

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