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Japanese investors

What happens when a country such as Japan dumps American Bonds?

What happens to the exchange rate?
What happens to the money supply?
What happens to the bond prices and yields/interest rates?


Solution Preview

Japanese investors increase their investments in dollar denominated securities in order to stem the appreciation of the yen. If these dollar denominated investments depreciate, yen loses value. If they buy bonds, this time the dollar strengthens ...

Solution Summary

Japanese investors are studied.