1. The president of the United States announces in a press conference that he will fight the higher inflation rate with a new anti inflation program. Predict what will happen to interest rates if the public believes him.

2. The chairman of the Fed announces that interest rates will rise sharply next year, and the market believes him. What will happen to today’s interest rate on AT&T bonds, such as the 8 1/8  s of 2022?

3. Predict what will happen to interest rates if the public suddenly expects a large increase in stock prices.

4. Predict what will happen to interest rates if prices in the bond market become more volatile.