Tuesday Jan 31, 2012
We are studying bonds in intermed accounting. Yesterday I menioned in class that interest rates on Portugal's debt were soaring. Read about it in Market Gives Up on Portugal.
the right hand scale is the interest rate. Bond prices for Portugal are falling in dramatic fashion as interest rates soar. As I said this indicates the market expects Portugal to default. I expect that it has been possible to short most of Portugal's debt and that has increased the yields further. A short means that investors have sold Portugese bonds betting on lower prices.
Professor Elam 
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