Unformatted text preview: l Rights Reserved 7 HOMEWORK
A. Briefly describe the implications of the following theories;
3. Pure Expectations Theory
Liquidity Premium Theory
Segmented Markets Theory B.
C. What factors do we consider when investing in bonds?
Why is the normal shape of the Yield Curve upward sloping
to the right?
D. What do we mean by a before-tax equivalent yield and why
is it important?
E. What is a forward rate and Why is it important?
and Dr. David P. Echevarria
Dr. All Rights Reserved 8...
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