5)Draw a supply/demand diagram to model the US stock market (use thevalue of a stock price index such as the S&P 500 to represent theoverall level of stock prices.) Show the effect on stock prices of adecline in interest rates in the economy. (hint: from the view point ofthose with accumulated savings to invest, interest bearing financialassets such as money market funds and bank certificates of deposit aresubstitutes for stock market mutual funds….also, from the viewpoint offuture corporate sales, lower interest rates mean that customers canmore cheaply finance the purchase of goods)6)The US treasury isn’t the only issuer of bonds. Corporations also issuebonds that have future payment structures like U.S. Treasuries. Ofcourse, unlike the federal government, corporations can go bankrupt,leaving their bondholders unable to collect all of their scheduledpayments. Because of this risk of default, corporate bonds must have ahigher yield in equilibrium than similarly structured Treasury bonds.Under what economy-wide economic conditions, if any, might you expect tosee corporate bond yields rise while Treasury Bond yields fell? 7.In the same context of Q6 above, briefly explain why the prices of ShortTerm US treasury securities are still high enough to keep the interestlow enough despite the fact that the US Bond rating has been downgradedfrom AAA status to AA+ by S&P in July, 2012.I just need the answer to question 5 and 7 asap
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