Terms in this set (13)
IOU viewed as Risk free
What you are paid to lend
The spot rate, also called "spot price," is based on the value of an asset at the moment of the quote. ... As a result, spot rates change frequently and sometimes dramatically.
How far from the par price below
You buy an asset at a "discounted" price. The discount is your "coupon" or return.
Normal yield curve
A normal yield curve forms during normal market conditions, when investors believe there won't be any significant changes to the economy (e.g., interest rates) and the economy will continue to grow at a normal rate.
Flat yield curve
A flat yield curve indicates that the market is sending mixed signals to investors, who are interpreting interest rate movements in various ways
Bond prices move up as rates move down. Bond prices move down as rates move up.
Term Structure of Rates
The term structure of interest rates - known as the yield curve - is the relationship between interest rates or bond yields that differ in their length of time to maturity.
The Federal reserve attempts to moderate inflation and National growth by manipulating US rates.
Inverted yield curve
Inverted yield curves are uncommon; they form when long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality.
How far from the par price above
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