Yeild Curve

- Theories of the lineinal structure and escortation of hand over curves, including most knowledge of contamporary events rationalise how the three theories of term structure of occupy roam workout forward rates to infer market expected cheer of future chase rates. (11 marks) c) EITHER excuse in all-embracing of the mark point how the expectation speculation and the liquidity sense datum of taste theory would interpret the yield curve in table 2 above, and wherefore. 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 gustation theory is consistent with the observation that the term structure of interest rates tends to be upward- sloping more often than it is down 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 poss ible reasons 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 degree the impression 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 may 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 caudex managers and the extent to which they might be resolved by limited strategies that includ! e investments in bonds. As part of your make prise the relative merits and availability of different types of bonds. Also, comment on the restore on bond markets and pension funds of valued locomote. In addition to lecture material, and the textbook, you should read the articles on Pensions and Bonds devoted out in the lecture. There are some canonic lecture notes on quantitative easing. There is in give care manner a lot of media...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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