Explain how a yield curve is constructed.

Q: Define constant yield method

A: It is the method of ascertaining the collected discount of securities that trade the secondary…

Q: Explain the differences between yield-to-maturity and yield-to-call

A: While both yield to maturity and yield to call are related to bonds they are not the same thing.

Q: Define yield curve

A: Yield is the percentage of securities at which the return is provided by the company to its…

Q: are the major assumptions made by economic order quantity (EOQ) model?

A: Step 1 Economic order quantity (EOQ) is the ideal order quantity a company should purchase to…

Q: What are the optimal prices and profits for pure bundling.

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Define actuarial rate of return

A: Definition: Actuarial rate of return is the expected value of losses of an insurance company that…

Q: What is market value ratio?

A: Ratio is the relation between two different quantities obtained after dividing one by another.

Q: Differentiate between price risk and reinvestment risk.

A: Price risk is the risk of decline of the price of the investment or an asset after the underlying…

Q: The yield curve usually has a positive slope.  Why?

A: Yield Curve- is  plotted on a graph on which yield of a bond or securities are plotted on the Y-axis…

Q: An upward-sloping yield curve

A: An upward sloping yield curve: may reflect the confounding of the liquidity premium with interest…

Q: Factors that Affect Yield to Maturity

A: A bond's yield to maturity depends basically on its present value, coupon rate and the time to…

Q: What is a yield curve, and what information would you need todraw this curve?

A: Yield curve: It could be a line plotting bond yields (coupon rates) of comparative credit quality…

Q: How to calculate profitability analysis?

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: Explain the goal of yield management

A: Yield management is a kind of pricing strategy.It is based on the understanding of the behavior of…

Q: Present and Explain the theories of the Yield Curve?

A: The yield curve is a curve that shows the relationship between the interest rates and the different…

Q: Arbitrage pricing theory is model developed to be used by:

A: Arbitrage is the practice of taking positive expected return from overvalued or undervalued…

Q: Breifly explain what "playing the yield curve" means.

A: The yield on a bond refers to the annual return that one gets as a bond matures. A yield curve is a…

Q: b. What i

A: Given as,

Q: Describe the downward demand spiral and its implications for pricing decisions.

A: Downward Demand Spiral: A downward demand spiral is a continuing reduction in the demand for a…

Q: Whatis a yield curve?

A: It is the percentage of the securities at which the return is provided by the company to its…

Q: What is normal yield curve?

A: The yield curve is a curve that shows the many yields to maturity and interest rates. The curve also…

Q: What is a yield curve? What does it mean when the yield curve is inverted?

A: Yield curve tells the relationship between the short term interest rates and long term interest…

Q: What are the important points to remember in preparing the breakeven point graph? The…

A: Break-even point is the point at which company neither earns profits nor incurs loss. Break-even…

Q: Explain how cost-of-carry is a factor in forward curve prices.

A: Cost of carry is the costs of holding the certain position in the market or in other words it is the…

Q: Explain CMO Price Behavior and Prepayment Rates?

A: The question is based on the concept of Collateralized Mortgage Obligations (CMO) , interest rate…

Q: Explain Yield Enhancement?

A: A "yield enhancement technique" is an investment approach that includes purchasing options at the…

Q: What are the measures of investment worth based on yield? What are they called?

A: Investment worth based on yield means that an investor is expecting certain income on an investment…

Q: Define yield.

A: Yield can be considered as a metric for cash flow for the investor on the amount with which a…

Q: What are the Relationship between Yield and Time?

A: Yield refers to the measurement of returns of an investment in a period of time. It measures the…

Q: How do you calculate yield to maturity?

A: The yield to maturity is nothing but the interest rate of a bond. It can also be termed as the…

Q: What is meant by investment yields?

A: Investment Yield:  It defined as Earnings or income which is earned on investment over the period of…

Q: Understand how fixedand variable costs behave andhow to use them to predictcosts.

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: a. Plot a yield curve based on these data. b. What type of yield curve is shown? c. What information…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Perform a profitability analysis

A: Profit is very important element of the business. Every business wants to have maximum profit in its…

Q: inverted

A: An inverted yield curve is a curve which shows that the company's long term debt instruments have a…

Q: Define yield to call (YTC)

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: Explain realized rate of return

A: The return generated by an investment is any asset class is the normalized rate of return. When the…

Q: Explain the difference between the yield to maturity and the yieldto call.

A: Bonds are the fixed income securities issued by the government or companies to raise funds from the…

Q: Explain the process of Rate-of-Return Calculation with Excel?

A: Rate of return is the rate expressed in terms of percentage which an investor expects from the…

Q: Use the ‘Liquidity Premium Theory’ to explain the shape of the yield curve.

A: Liquidity Premium Theory states that investors will require a higher rate of return(interest rate or…

Q: Explain an upward sloping yield curve using the pure expectation theory.

A: Pure expectation theory: Pure expectation theory states that expected future spot rates will be…

Q: Explain with example the Yield to Maturity?

A: A bond is a financial instrument that is issued by the government and the corporate to raise the…

Q: What is the difference between yield to maturity and current yield? Explain

A: Bond is a debt instrument issued by companies and government. It is a fixed income instrument which…