Which of the following is NOT a primary factor that influences the shape of the yield curve? a. International interest rates b. Level of business activity c. Federal budget surplus d. Immigration e. Federal Reserve policies
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Which of the following is NOT a primary factor that influences the shape of the yield curve? a. International interest rates b. Level of business activity c. Federal budget surplus d. Immigration e. Federal Reserve policies
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- What are the key factors that most affect the level and shape of the yield curve?View Solution:Which of the following are yield curves NOT used for? a.Explaining the relationship between inflation and interest rates. b.Forecasting future changes in economic activity. c.Forecasting future interest rates. d.Forecasting future rates of inflation. e.Explaining how investors prefer less liquidity to more liquidity.Discuss the various shapes a yield curve can take and briefly outline the market conditions that would lead to each shape.
- With a flat yield curve do you prefer to lend in the short term or long term A Short term since there is no incentive to lend in the long term B Long term since there is no incentive to lend in the short term C Neither since the yield curve is flat D Neither till new information comes outDiscuss and compare the three explanations for the shape of the yield curve. Discuss and compare the three explanations for the shape ofAn inverted yield curve predicts that short-term interest rates a. are expected to rise in the future. b. will rise and then fall in the future. c. will remain unchanged in the future. d. will fall in the future. e. None of the above
- Please draw graph and show upward and downward yield curves and define them.Yield curve: a) The US Treasury yield curve provides clues about the future direction of: 1) _________________, 2) _________________ and 3) __________________. b) In a couple of words, why is the US Yield Curve usually upward sloping? c) how is an “inverted curve” defined? d)An inverted yield curve is a reliable prediction of:i. When interest rates __________, the market required rates of return ________, and the bond prices will ________. j. If interest rates increase after a bond issue, the yield-to-maturity will ______,
- There are a number of theories that attempt to explain the observed facts concerning yield curves. First, explain these observed facts. Next, explain the theories that have been developed to account for these facts. Feel free to use the current yield curve to illustrate our answer. Finally, from December 2015 through December 2018, , the Fed raised the target level for the federal funds rate nine times. While short-term interest rates increased substantially, long-term rates increased only slightly (making the yield curve flatter, or even inverted). Show and explain why short-term and long-term interest rates have not moved togetherPlease answer each of the following questions in detail and provide in-text citations in support of your argument. Include examples whenever applicable. Make sure to provide examples for each of the questions below. 2. Describe the meaning of the yield curve. Verify how the shape of the yield curve provides predictions on the economy in future years. Please visit the US Governments’The figure provides the yield spreads of the long-term corporate bonds versus U.S. treasury bonds. Choose ONE wrong explanation for the increase in the spread during 2009.