{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

BUS2020F+-+Bonds+L2

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

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style 4/8/10 BONDS 2 Michael Vermeulen LC 5.29
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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
Image of page 2
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
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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.
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern