Describe the Policy Ineffectiveness Proposition (PIP)

question 73

Essay

Describe the policy ineffectiveness proposition (PIP).Be sure to state which economic theory the PIP is associated with and the assumptions that are necessary for this argument to hold.

Recognize the significance of call, sinking fund, and convertible features in bonds.

Understand the reasons behind bond ratings and their impact on investor perceptions and bond pricing.

Analyze the term structure of interest rates and its components.

Appreciate the effect of inflation on bond returns and the Fisher effect.

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Definitions:

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