15.10 - Considered to be a predictor of economic recession...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
    YIELD CURVE
Background image of page 1

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

View Full DocumentRight Arrow Icon
Normal Yield Curve A longer maturity bonds have a higher yield compared to shorter-term bonds “Normal" because the market usually expects more compensation for greater risk. Longer-term bonds are exposed to more risks such as changes in: inflation, in interest rates and an increased exposure to potential defaults.
Background image of page 2
Inverted Yield Curve Long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality.
Background image of page 3

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

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

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

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Considered to be a predictor of economic recession FlatYield Curve Little difference between short-term and long-term rates for bonds of the same credit quality. Often seen during transitions between normal and inverted curves. When short- and long-term bonds are offering equivalent yields, there is usually little benefit in holding the longer-term instruments. Government of Canada Yield Curves 2 3 4 5 6 7 8 9 10 90d 2yr 5yr 10yr 30yr Jan-07 Jan-97 Jan-92...
View Full Document

Page1 / 7

15.10 - Considered to be a predictor of economic recession...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online