A yield curve is a graphical representation of the relationship between the yields and the maturities of securities issued by a given borrower in a given currency on a given date. The mathematical relationship between these two variables, the yield and the maturity, is called the term structure of interest rates, and the graphical relationship (plotted curve) is called the yield curve. A yield curve can exhibit a variety of shapes, and the general shapes have been given a specific name. Identify the name of the yield curve that matches the pattern described as follows: Name Given to Describe Description of the Yield Curve the Yield Curve The yield curve exhibits an upward-sloping path. Normal yield curve Short-term and long-term (for example, 1-year and 30-year) rates are Humped yield curve Flat yield curve Inverted yield curve significantly less than intermediate-term (for example, 10-year) rates. The yield curve exhibits a zero slope Short-term rates are greater than long-term rates.
A yield curve is a graphical representation of the relationship between the yields and the maturities of securities issued by a given borrower in a given currency on a given date. The mathematical relationship between these two variables, the yield and the maturity, is called the term structure of interest rates, and the graphical relationship (plotted curve) is called the yield curve. A yield curve can exhibit a variety of shapes, and the general shapes have been given a specific name. Identify the name of the yield curve that matches the pattern described as follows: Name Given to Describe Description of the Yield Curve the Yield Curve The yield curve exhibits an upward-sloping path. Normal yield curve Short-term and long-term (for example, 1-year and 30-year) rates are Humped yield curve Flat yield curve Inverted yield curve significantly less than intermediate-term (for example, 10-year) rates. The yield curve exhibits a zero slope Short-term rates are greater than long-term rates.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...
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