How might the lowered tax and the resulting reduced interest tax shield help to explain the fact that stocks and bonds are moving together in response to interest rate changes? 

How might homegrown leverage created during the extended markets' climb now be fanning the flames (at least this issue is quickly resolved). Explain how. Will the negative covariance be between stocks and bonds return? Will it be as strong as before?

Answer rating: 100% (QA)

A tax shield is a reduction in taxable income for an individual or corporation achieved through claiming allowable deductions such as mortgage interest medical expenses charitable donations amortizati... View the full answer