Bond Yields - TermStructureofInterestRates:...

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Term Structure of Interest Rates: Relationship with the Business Cycle Yield Maturity Peak Trough Normal Expansion Typical Shapes
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Short-Term Interest Rates: Examples t-bill yield, e.g., 91-day rate issued by government bank rate central bank rate: lending to banks bankers acceptance (BAs), e.g., 3-month guaranteed by chartered banks commercial paper, e.g., 3-month corporate borrowing (typically unsecured) prime rate chartered bank lending to “best customers” typically move together (but not lockstep) . . . Problem 1 and 3
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Bonds Nomenclature A COUPON BOND is a combination of an annuity (the annual or semi-annual coupon payments) and a zero coupon bond (with face value due at maturity). Example : 15 year bond with 8% coupons (paid semi-annually) and $1000 par value. This coupon bond pays to the holder, $40 every six months for fifteen years At the end of fifteen years, the principal amount of $1000 is repaid with the final coupon payment of $40.
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Bond Yields - TermStructureofInterestRates:...

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