Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Interest rate movements also affect the value of most financial institutions. They affect the cost of funds for depository institutions and the interest received on some loans by financial institutions. to. Wars tend to provoke significant reactions in financial markets. Why would a war in the Middle East put upward pressure on US interest rates? Why might some investors expect a war like this to put downward pressure on U.S. interest rates? b. Explain how movements in interest rates influence the prices of debt securities. C. Suppose Singapore has a very strong economy, which puts upward pressure on both inflation and interest rates. Explain how these conditions could put pressure on the value of the Singapore dollar and determine whether the value of the dollar will rise or fall.

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a A war in the Middle East could put upward pressure on US interest rates due to several factors Geopolitical uncertainty Wars in the Middle East often create geopolitical instability which can lead t... View the full answer