Use a Graph for the Supply and Demand for Bonds

question 23

Essay

Use a graph for the supply and demand for bonds to explain the effect of an increase in the government budget deficit on the equilibrium yield.

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Definitions:

Technical Analysis

The evaluation of securities by means of studying past market data, primarily price and volume.

Retain Earnings

Profits that a company has decided to keep or retain rather than paying out to shareholders in dividends or reinvesting back into the company.

Issue Stock

To issue stock is a process whereby a company distributes new shares to investors, thus raising capital in exchange for ownership stakes in the corporation.

IPO

Initial Public Offering, the process through which a private company offers its shares to the public for the first time.