why investors track moves in the yield curve?
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why investors track moves in the yield curve?
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- How does the size of the initial investment affect the internal rate of return on the net present value models?What is a characteristic line? How is this line used to estimate a stocks beta coefficient? Write out and explain the formula that relates total risk, market risk, and diversifiable risk.What is the reason for investors to track moves in the yield curve? Please discuss in more depth and maybe more practical examples.
- What is the relationship between the price, coupon rate and market yield?Explain how a yield curve is constructed and what its shape reveals about interest rates.A special case of the Internal Rate of Return (IRR) is the Yield to Maturity (YTM). Explain how the YTM is used to calculate the yield curve and why investors track moves in the yield curve.
- What is the term for the type of interest rates that constitute the yield curve? What do these interest rates represent?Describe what the zero-coupon yield curve measures. Quickly sketch what you expect the likely shape of this curve to be in normal economic conditions, and explain why.How does the constant–growth model influence financial decisions regarding risk and return?
