The Bond Market Winners and Losers

What is the role of indirect bidders in U.S. Treasury auctions?

• They are domestic banks buying bonds for clients.

• They are individual investors purchasing bonds directly.

• They are foreign investors who help maintain demand.

• They are the primary dealers of bonds.

How do rising interest rates affect pension funds?

• They decrease the funds' ability to match liabilities.

• They increase the funds' liabilities.

• They help funds better match their future liabilities.

• They force funds to invest more in stocks.

Why might pension funds shift their investments from stocks to bonds?

• To take advantage of higher bond yields.

• To increase their risk exposure.

• To diversify their investment portfolio.

• To reduce their overall investment size.

What is a potential challenge of issuing 100-year bonds?

• Ensuring bonds are tax-free.

• Finding enough buyers for such long-term debt.

• Competing with short-term bonds.

• Setting a yield that is too low.

How does the yield curve affect long-term bond sales?

• It makes long-term bonds more attractive.

• It has no impact on bond sales.

• It flattens, reducing the yield advantage of long-term bonds.

• It steepens, increasing the yield advantage of long-term bonds.