Yeild Curve

- Theories of the callinal structure and escortation of mother curves, including most knowledge of contamporary events explain how the three theories of term structure of occupy roam function forward rates to infer market expected repute of future use up rates. (11 marks) c) EITHER excuse in bulky of the mark point how the expectation possible action and the liquidity sensation of taste theory would interpret the yield curve in table 2 above, and why. e)Explain how the expectations theory and the market liquidation theory would interpret a down(prenominal) slopping yield curve. (8 marks) (e)Discuss why the liquidity option theory is consistent with the observation that the term structure of interest rates tends to be upward- sloping more often than it is down(prenominal) sloping. (9 marks) (c) Discuss the yields in table 2 with reference to theories of the term structure of interest rates. (12 marks) (JAN2009) Q5Comment on the possible re asons for the process of the yield curve based on the data in Q1. (e)Explain why duration matching might be recommended as a method of stand by portfolio management. Explain in level the judgment of duration and how bond managers can use this concept to protect bond portfolios from interest rate risk.

(12 marks) (e)Explain the immunization strategies which whitethorn be followed by a bond portfolio manager in order to shed her/his liabilities from interest rate risk. (10 marks) Tutorial 3 Explain and discuss the problems faced by subsidy depot managers and the extent to which they might be reso lved by specific strategies that include in! vestments in bonds. As part of your make appraise the relative merits and availability of different types of bonds. Also, comment on the adjoin on bond markets and pension funds of valued relievo. In addition to lecture material, and the textbook, you should read the articles on Pensions and Bonds apt(p) out in the lecture. There are some primary lecture notes on quantitative easing. There is in comparable manner a lot of media...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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