What Will Fed Tapering Mean for Investors?
... to soften such potential blows. In this scenario, investments which are higher quality and shorter in maturities will likely outperform lower quality and longer portfolios. • Interest rates might drift lower or remain at current levels should the economy stalls, forcing the Fed to employ further st ...
... to soften such potential blows. In this scenario, investments which are higher quality and shorter in maturities will likely outperform lower quality and longer portfolios. • Interest rates might drift lower or remain at current levels should the economy stalls, forcing the Fed to employ further st ...
Problem Set 2
... a. You just inherited $100,000. (Answer: More) b. Real estate commissions fall from 6 percent of the sales price to 4 percent of the sales price. (Answer: More) c. You expect Polaroid stock to double in value next year. (Answer: Less) d. Prices in the stock market become more volatile. (Answer: More ...
... a. You just inherited $100,000. (Answer: More) b. Real estate commissions fall from 6 percent of the sales price to 4 percent of the sales price. (Answer: More) c. You expect Polaroid stock to double in value next year. (Answer: Less) d. Prices in the stock market become more volatile. (Answer: More ...
Municipal Market: How Rates Rise Matters
... The Bloomberg Barclays Municipal Bond Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market. The Index tracks general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds rated Baa3/BBB – or higher by at least two of the ratings agen ...
... The Bloomberg Barclays Municipal Bond Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market. The Index tracks general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds rated Baa3/BBB – or higher by at least two of the ratings agen ...
Chapter 2: The Basics of Supply and Demand Elasticities of Supply
... taking a risk. For a risk averse person, the plot of utility vs income is upward sloping but with diminishing marginal utility. The risk premium is the difference in income between the expected value of a risky proposition and income associated with the point on the indifference curve with the same ...
... taking a risk. For a risk averse person, the plot of utility vs income is upward sloping but with diminishing marginal utility. The risk premium is the difference in income between the expected value of a risky proposition and income associated with the point on the indifference curve with the same ...
Investology Times - Investology Inc.
... the twilight of a decades-old secular bull market in bonds. As of Sept. 28, the yield on the 10-year U.S. Treasury stood near 2.1%. After accounting for inflation, the real yield on the 10-year Treasury was about 0.3%. Interest rates are historically low. This is bad news for savers. Low yields port ...
... the twilight of a decades-old secular bull market in bonds. As of Sept. 28, the yield on the 10-year U.S. Treasury stood near 2.1%. After accounting for inflation, the real yield on the 10-year Treasury was about 0.3%. Interest rates are historically low. This is bad news for savers. Low yields port ...
Fabozzi_Ch05_BMAS_7thEd
... The yield curve is the graphical depiction of the relation between the yield on bonds of the same credit quality but different maturities. Investors have typically constructed yield curves from observations of prices and yields in the Treasury market for two reasons: i. First, Treasury securities ...
... The yield curve is the graphical depiction of the relation between the yield on bonds of the same credit quality but different maturities. Investors have typically constructed yield curves from observations of prices and yields in the Treasury market for two reasons: i. First, Treasury securities ...
movement research note
... were not realized in a client account. Starting bond yield data is for the 5-year U.S. Treasury and is also sourced from FRED. Subsequent 10-year CAGR bond data is calculated by taking the 10-year compounded growth rate of VFITX, a mutual fund that hold 5-year U.S. Treasuries. MVMT Capital LLC (“Mov ...
... were not realized in a client account. Starting bond yield data is for the 5-year U.S. Treasury and is also sourced from FRED. Subsequent 10-year CAGR bond data is calculated by taking the 10-year compounded growth rate of VFITX, a mutual fund that hold 5-year U.S. Treasuries. MVMT Capital LLC (“Mov ...
FNCE 3020 Spring 2004
... far, is a general representation of the “average” interest rate in the economy at a point in time. In addition to this general representation, we can extend the model to various segments of the bond market to account for relative changes in interest rates among a range of debt markets. ...
... far, is a general representation of the “average” interest rate in the economy at a point in time. In addition to this general representation, we can extend the model to various segments of the bond market to account for relative changes in interest rates among a range of debt markets. ...
World Economy in Transition: Explaining the Dividend Yield in the
... are expected in the future, or that investors, viewed collectively, have a high tolerance for risk, or that risk is low. These same fundamentals are reflected in a number of macroeconomic variables. For example, the macroeconomic forces that influence corporate profitability and earnings will also p ...
... are expected in the future, or that investors, viewed collectively, have a high tolerance for risk, or that risk is low. These same fundamentals are reflected in a number of macroeconomic variables. For example, the macroeconomic forces that influence corporate profitability and earnings will also p ...
MULTIPLE CHOICE. Choose the one alternative
... 8) Factors that increase the demand for bonds include A) an increase in the inflation rate. ...
... 8) Factors that increase the demand for bonds include A) an increase in the inflation rate. ...
Just how low can bond yields go?
... change in the markets that followed didn’t happen overnight, but it did trigger the slow and steady decline in yields across the short end of the yield curve. This process was further enhanced by the quantitative easing measures that the ECB announced at the end of January, adding a net new buyer in ...
... change in the markets that followed didn’t happen overnight, but it did trigger the slow and steady decline in yields across the short end of the yield curve. This process was further enhanced by the quantitative easing measures that the ECB announced at the end of January, adding a net new buyer in ...
What Might Investors Expect from US High Yield?
... The current yield spread of 425–450 bps is narrower than the 20-year high-yield index median of 573 bps, but this level may not represent extraordinary overvaluation, nor may it imply an imminent reversion to the mean. During past credit cycles in 1987, 1997–98, and in 2005–07, spreads on the high- ...
... The current yield spread of 425–450 bps is narrower than the 20-year high-yield index median of 573 bps, but this level may not represent extraordinary overvaluation, nor may it imply an imminent reversion to the mean. During past credit cycles in 1987, 1997–98, and in 2005–07, spreads on the high- ...
Chap 4 problem solutions
... If interest rates have fallen, the reinvestment of principal will be at a lower rate, with correspondingly lower interest payments and ending value. Note that long-term debt securities also have some reinvestment rate risk because their interest payments have to be reinvested at prevailing rates. p. ...
... If interest rates have fallen, the reinvestment of principal will be at a lower rate, with correspondingly lower interest payments and ending value. Note that long-term debt securities also have some reinvestment rate risk because their interest payments have to be reinvested at prevailing rates. p. ...
National Income and the Price Level in the Short Run
... THE SLOPE OF THE SRAS CURVE • Costs & Output: are positively related. • Prices & Output: positively associated due to actions of price-takers and prices-setters . • Real & Nominal Wages: in the price and output level is associated with a fall in real wage i.e. a rise in the price of output relative ...
... THE SLOPE OF THE SRAS CURVE • Costs & Output: are positively related. • Prices & Output: positively associated due to actions of price-takers and prices-setters . • Real & Nominal Wages: in the price and output level is associated with a fall in real wage i.e. a rise in the price of output relative ...
Test - I.I.S.S. Calamandrei
... TEST – Economic activity, Business and trade, Demand and supply 3’ B ERICA The use of a dictionary is not permitted ...
... TEST – Economic activity, Business and trade, Demand and supply 3’ B ERICA The use of a dictionary is not permitted ...
HSBC Euro High Yield - Cantor Fitzgerald Ireland
... currencies are subject to fluctuations in exchange rates, which may have an adverse affect on the value of the investments, sale proceeds, and on dividend or interest income. The income you get from your investment may go down as well as up. Figures quoted are estimates only; they are not a reliable ...
... currencies are subject to fluctuations in exchange rates, which may have an adverse affect on the value of the investments, sale proceeds, and on dividend or interest income. The income you get from your investment may go down as well as up. Figures quoted are estimates only; they are not a reliable ...
Lecture 12
... • The YTM of a coupon bond is the return of investing in the bond, holding it until maturity and reinvesting the coupons at a rate to the YTM. • The YTM is not the return for any investment horizon other than maturity. This is for the same reason as for zero-coupon bonds. • The YTM is not the return ...
... • The YTM of a coupon bond is the return of investing in the bond, holding it until maturity and reinvesting the coupons at a rate to the YTM. • The YTM is not the return for any investment horizon other than maturity. This is for the same reason as for zero-coupon bonds. • The YTM is not the return ...
Risk Management and Financial Institutions
... showing the rate of interest at which a AA-rated company can borrow for 1, 2, 3 … years Alternative 2: Use swap rates so that the term structure represents future short term AA borrowing rates Alternative 2 is the usual approach. It creates the LIBOR/swap term structure of interest rates ...
... showing the rate of interest at which a AA-rated company can borrow for 1, 2, 3 … years Alternative 2: Use swap rates so that the term structure represents future short term AA borrowing rates Alternative 2 is the usual approach. It creates the LIBOR/swap term structure of interest rates ...
Yield curve
In finance, the yield curve is a curve showing several yields or interest rates across different contract lengths (2 month, 2 year, 20 year, etc...) for a similar debt contract. The curve shows the relation between the (level of) interest rate (or cost of borrowing) and the time to maturity, known as the ""term"", of the debt for a given borrower in a given currency. For example, the U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called ""the yield curve"". More formal mathematical descriptions of this relation are often called the term structure of interest rates.The shape of the yield curve indicates the cumulative priorities of all lenders relative to a particular borrower, (such as the US Treasury or the Treasury of Japan) or the priorities of a single lender relative to all possible borrowers. With other factors held equal, lenders will prefer to have funds at their disposal, rather than at the disposal of a third party. The interest rate is the ""price"" paid to convince them to lend. As the term of the loan increases, lenders demand an increase in the interest received. In addition, lenders may be concerned about future circumstances, e.g. a potential default (or rising rates of inflation), so they offer higher interest rates on long-term loans than they offer on shorter-term loans to compensate for the increased risk. Occasionally, when lenders are seeking long-term debt contracts more aggressively than short-term debt contracts, the yield curve ""inverts"", with interest rates (yields) being lower for the longer periods of repayment so that lenders can attract long-term borrowing.The yield of a debt instrument is the overall rate of return available on the investment. In general the percentage per year that can be earned is dependent on the length of time that the money is invested. For example, a bank may offer a ""savings rate"" higher than the normal checking account rate if the customer is prepared to leave money untouched for five years. Investing for a period of time t gives a yield Y(t).This function Y is called the yield curve, and it is often, but not always, an increasing function of t. Yield curves are used by fixed income analysts, who analyze bonds and related securities, to understand conditions in financial markets and to seek trading opportunities. Economists use the curves to understand economic conditions.The yield curve function Y is actually only known with certainty for a few specific maturity dates, while the other maturities are calculated by interpolation (see Construction of the full yield curve from market data below).