This discussion builds on course content on Modules 5 and 6 covering interest rate determination and bond pricing , requiring reflective thought on the concepts and theories presented in the context of the current financial markets. Both stocks and bonds are down significantly this year, which is unusual because most of the time when stocks enter bear market territory (down 20% or more), bond prices rise and mitigate the damage to investment portfolios. When answering the four questions below, consider the macroeconomic factors causing interest rates to move. You can answer each of the four questions in two or three sentences before responding to the the posts of others in the class.

1) Why did bond prices fall this year?

2) Do you think interest rates will continue to rise? Justify your answer.

3) What would cause interest rates to fall in the next year?

4) If you expect interest rates to fall, would you invest in zero-coupon bonds? Explain your answer.