Historical look at the treasury yield curve, Financial Management

Assignment Help:

The minimum interest rate which investors demand for non-treasury securities is represented by the yield offered on the treasury securities. This is why market participants monitor the treasury securities, especially the yield of on-the-run issues, on a continuous basis. Now, let us look into the relationship between the yield offered on on-the-run treasury securities and maturity.

 Shape of the Yield Curve

Historically, three types of yield curve shapes have been observed. The first is normal or positively sloped yield curve (figure 1). This is a yield curve in which an investor is rewarded with a higher yield for holding longer maturity Treasuries. The second type of curve is known as a flat yield curve(figure 2). In a flat yield curve, the yield doesn't vary with the maturity, i.e., it remains same for all maturities. The third and last type is inverted or negative sloped yield curve in which the longer the maturity the lower is the yield(figure 3).

Figure 1

125_shape of yield curve.png

Figure 2

1371_shape of yield curve1.png

Figure 3

1907_shape of yield curve2.png


Related Discussions:- Historical look at the treasury yield curve

State the example to calculate the present value, State the Example to calc...

State the Example to calculate the present value 2, 00,000 $ is the amount which you require after 20 years for your retirement. How much must you invest now at 5% per annum co

Ansawar, explain the concept of working capital.what are the factors which ...

explain the concept of working capital.what are the factors which influence the working capital?

How can we measure total return- rate of return, How can we measure Total r...

How can we measure Total return- Measuring the Rate of Return Total return can be defined as: Total returns = (Cash payment received + Price change over the period) / Purcha

Define the risk of cost of capital, Risk of cost of capital A straight...

Risk of cost of capital A straightforward assumption of traditional cost of capital analysis is that firm's business and financial risk are unaffected by acceptance and financ

What do you mean by working capital, Q. What do you mean by Working Capital...

Q. What do you mean by Working Capital? Meaning of Working Capital:- Working capital management is a significant aspect of financial management. In business money is necessar

What is an agent? what are the responsibilities of an agent?, What is an ag...

What is an agent? What are the responsibilities of an agent? An agent is a person who has the actual or implied authority to act on behalf of another.  The owners whom the agen

What is share exchange, What is Share exchange    Predator company off...

What is Share exchange    Predator company offers their shares in exchange for target company's shares. So target shareholders become part of predator shareholders and so have

Assignment, Imagine you have been allocated $100,000 which is to be investe...

Imagine you have been allocated $100,000 which is to be invested in 8 companies listed on the Australian Stock Exchange (ASX). You are required to have a balanced portfolio betwee

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