Term structure of interest rates, Finance Basics

Assignment Help:

Term Structure of Interest Rates

The term structure of interest rate give details the relationship between the term to maturity and interest rates and the differences between long term and short term interest rates.

The relationship among long and short interest rates is significant to corporate managers since:

1. They must decide where to buy long term or short term bonds and where to borrow via issuing short-term or long-term bonds.

2. It enables them to understand how short term and long term rates are concerned and what reasons the shift in their relative positions.

Some theories had been advanced to clarify the nature of yield curve - These are like:

  • Liquidity preference theory
  • Expectation theory
  • Market segmentation theory

Related Discussions:- Term structure of interest rates

What are the functions of stock exchange, What are the Functions of Stock E...

What are the Functions of Stock Exchange Main functions performed b stock exchange are as follows: (1) Providing Liquidity and Marketability to existing securities: Sto

Calculate the expected sale, 1. Suppose company A expects to increase unit ...

1. Suppose company A expects to increase unit sales of i-phone by 15% per year for the next 5 years. If you currently sell 3 million i-phones in one year, how many phones do you ex

Tom and Martha Holt Case Study., Which of the following retirement plan alt...

Which of the following retirement plan alternatives would allow Tom the greatest deductible contribution while providing him with only a small cash flow commitment each year based

Accounts receviable , sir could you please tel me what is A/R process.

sir could you please tel me what is A/R process.

Share price, A firm just announced that it will cut its dividend from 4.9 d...

A firm just announced that it will cut its dividend from 4.9 dollars per share to 2.1 dollars per share at the end of this year. The dividend was expected to grow 2.7% every year b

Expectation theory, Expectation Theory The theory states here that the...

Expectation Theory The theory states here that the yield curve depends on the expectation concerning with future inflation rates. The rate on long-term bonds will exceed, If i

Discuss potential problems of internal finance, Internal finance can avoid ...

Internal finance can avoid the agency costs of debt and equity finance. In practice it is the most important source of funding.   (a)  Discuss potential problems of internal finan

Types of partners, Types of Partners 1. General Partners -Unlimited ac...

Types of Partners 1. General Partners -Unlimited active and liability in participation in partnership activities. 2. Limited partners - Limited liability in the management of

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd