Concept of yield spreads, Financial Management

  • The Central Bank is an authority responsible for monetary policy of its country. It regulates money supply and credit, issues currency, and manages exchange rate.  It strives to maintain the stability of its national currency and money supply. It works with different policy tools like open market operations, bank reserve requirements, interest rate policy, capital requirements, exchange requirements, etc.

  • Treasury yield curve is the curve pertaining to treasury securities. It is the most common yield curve used as a base rate for its high liquidity and riskless nature.

  • Yield spread can be measured in terms of either absolute yield spread or relative yield spread. A yield spread between any two bond issues can be easily computed when the maturity date for both these issues is same.

  • Liquidity spreads are the spreads visible in the secondary markets for treasury securities. On-the-run treasuries are the treasury securities wherein the liquidity spread is more visible by virtue of its less liquidity and frequent trading in the secondary markets.

Posted Date: 9/10/2012 3:15:49 AM | Location : United States







Related Discussions:- Concept of yield spreads, Assignment Help, Ask Question on Concept of yield spreads, Get Answer, Expert's Help, Concept of yield spreads Discussions

Write discussion on Concept of yield spreads
Your posts are moderated
Related Questions
A financial consultant obtains different valuations of my company when it discounts the Free Cash Flow (FCF) as opposed to when it uses the Equity Cash Flow. Is this correct? N

There are several methods available to forecast yield volatility. But before that, let us look into the calculation of forecasted standard deviation. Assume th

2. Suppose a 12% coupon bond sells at par today; and three years from today, the required rate on the same bond is 8%. What is the coupon rate on the bond today and what will it be

Policy Conflicts in Debt and Monetary Management: Co-ordination of operations is important so as to avoid differences in the policies of cash and debt management of the governm

Capital cost of product a is ? 5 crores and initial capital cost of product b is ? 3 crores. Life of product a is 30 years and life of product b is 10 years . The difference in ini

Q.  A sum of $2,500 is deposited in a bank account that pays 5.25% interest compounded weekly. How long will it take for the deposit to double?  How long will it take you to accrue

Explain how Eurocurrency is created. Answer: The center of the international money market is the Eurocurrency market. A Eurocurrency is a time deposit of money in an internationa

It is a phrase referring to the tendency of departments to become isolated from one another in a functionally structured company.

Eatmore & Green Pty. Ltd (Australia) is a successful medium sized marketing consultancy for Australian agricultural products and Australian sourced organic, natural beauty/cosmetic

International financial system has always been a debatable and crucial focus of the world discussion and it is mainly due to the repression of the economies especially after the cu