What do you mean by yield curve, Macroeconomics

Assignment Help:

Q. What do you mean by yield curve?

Yield curve is a graph of interest rates of different maturity (recalculated to yearly rates) at a specific point in time. It's common for the yield curve to slope upwards (interest rates with longer maturity are normally higher than those with a shorter maturity). Reason for this is that there is a higher demand for loans with longer maturity owing to the decreased uncertainty. Many borrowers are prepared to pay a premium to avoid fluctuations in the interest rates.

As discussed above, if market expects higher interest rates then slope of the yield curve would increase. Though not very common, slope may be negative if market expects the interest rates to fall more than premium on longer rates.


Related Discussions:- What do you mean by yield curve

Democracy survive if a majority of the citizen, Can democracy survive if a ...

Can democracy survive if a majority of the citizen pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?

Demand analysis, how the demand of pizzas in pizza hut affecting the market...

how the demand of pizzas in pizza hut affecting the market of fast food

Circular flow of income, Explain a circular flow of income in a frugal econ...

Explain a circular flow of income in a frugal econmomy with diagram

International trade, Suppose home cost pricing prevails in international tr...

Suppose home cost pricing prevails in international trade, while world output is declining. Consider two economies, A and B, both having floating exchange rates and the same moneta

What is the significance of foreign exchange rate risk, Foreign exchange ri...

Foreign exchange risk is the level of uncertainty that a company must handle for changes in foreign exchange rates that will unfavourably affect the money the company receives for

Trade-off proposals, While referring to the "EYE on YOUR LIFE" section on p...

While referring to the "EYE on YOUR LIFE" section on page 235 of the textbook, and the economic concepts you have accumulated during our course, consider the trade policies that se

Manager at a local bank analyzed the relationship, A manager at a local ban...

A manager at a local bank analyzed the relationship between monthly salary and three independent variables: length of service (measured in months), gender (0 = female, 1 = male) an

Macroeconomics, Suppose that several months of data showed the CPI increasi...

Suppose that several months of data showed the CPI increasing at a 4.5% annual rate due largely to increases in the price of energy and food related commodities following several y

Monetization of public debt, What are the pros and cons of monetization of ...

What are the pros and cons of monetization of public debt

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