BUS2020F+-+Bonds+L2

BUS2020F+-+Bonds+L2 - BONDS 2 Michael Vermeulen Click to...

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Click to edit Master subtitle style 4/8/10 BONDS 2 Michael Vermeulen LC 5.29
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4/8/10 22 Zero Coupon Rates & Forward rate Short Interest Rate The interest rate for a given time interval is called the Short Interest Rate for that period (one period interest rate). Spot Rate The YTM on bonds is sometimes
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4/8/10 33 Term to Maturity and Term Structure Theory term structure – relationship between yield and price term structure theory deals with why pure discount bonds of different maturities have different YTM’s YTM Time to Maturity YTM Time to Maturity
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4/8/10 44 Term Structure The shape of the yield curve changes daily as a result of market information (Nominal interest rate = CPI + Risk Premium) If you understand the shape of the yield curve you can use it as a predictor of future economic activity The relationship between yield to maturity and maturity Information on expected future short term rates can be implied from yield curve. The yield curve is a graph that displays the relationship
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This note was uploaded on 04/06/2010 for the course ECON 2342 taught by Professor James during the Three '09 term at ADFA.

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BUS2020F+-+Bonds+L2 - BONDS 2 Michael Vermeulen Click to...

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