Determine what is the yield curve, Macroeconomics

Assignment Help:

Determine what is the yield curve

The yield curve is a graph of interest rates of different maturity (recalculated to yearly rates) at a particular point in time. It is common for the yield curve to slope upwards (interest rates with longer maturity are generally higher than those with a shorter maturity). The reason for this is that there is a higher demand for loans with longer maturity due to the reduced uncertainty. Many borrowers are prepared to pay a premium to avoid fluctuations in the interest rates.

If the market expects higher interest rates, then the slope of the yield curve will increase. Although not very common, the slope may be negative if the market expects the interest rates to fall more than the premium on longer rates.

 


Related Discussions:- Determine what is the yield curve

IS and LM model, An economy shows the following features C=50+0.9(Y-T) T=1...

An economy shows the following features C=50+0.9(Y-T) T=100 I=100-5i G=100 L=0.2Y-10i M/P=100 X=20 M=10+0.1Y a)Obtain the IS and LM for this economy b)Find out the equilibrium inc

Analysis the net benefits of cleanup are maximized, Consider the case of c...

Consider the case of cleaning up chemical contamination at an industrial site. The marginal benefits of additional cleanup are decreasing as the amount of cleanup increases. Howeve

What do you mean by gross domestic product, What do you mean by Gross Domes...

What do you mean by Gross Domestic Product? Gross Domestic Product (GDP): It measures the value of economic activity which is output produced, into the geographical bound

Illustrate the overview and importance of macroeconomics, Illustrate the ov...

Illustrate the overview and importance of macroeconomics? After familiar with this illustration, able to know: a. An overview of macroeconomics is the study about the econom

Profit maximizing firm, A profit maximizing firm has a production function ...

A profit maximizing firm has a production function such that: Y=K2L2 a) If P=10,rk=2,andWL=3 , what would be its optimum be? How can you show that it is a maximum? b) How

Alternaria toxins, Several species of Alternaria (A. citri, A. alternata, ...

Several species of Alternaria (A. citri, A. alternata, A. solani and A. tenuissima) produce toxic substances that have been found in apples, tomatoes, blueberries and others. The

Hurricane or flood or a pandemic strikes, When a hurricane or flood or a pa...

When a hurricane or flood or a pandemic strikes a country, who is most likely to respond first?

Firms use crowd sourcing technique, Thread less is an example of a firm bui...

Thread less is an example of a firm building on its customer base to use new products and also to participate in the design and vetting of popular designs. In the summer of 2010, D

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd