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Address the following discussion questions from Chapter 11 of your text: Using The Wall Street Journal or Barron's , find the bond yields for...
Address the following discussion questions from Chapter 11 of your text:
- Q11.2. Using The Wall Street Journal or Barron's, find the bond yields for Treasury securities with the following maturities: three months, six months, one year, three years, five years, 10 years, 15 years, and 20 years. Construct a yield curve based on these reported yields, putting term-to-maturity on the horizontal (x) axis and yield-to-maturity on the vertical (y) axis. Briefly discuss the general shape of your yield curve. What conclusions might you draw about future interest rate movements from this yield curve?
- Q11.3. Explain what will happen to a bond's duration measure if each of the following events occur (provide an explanation for only those events listed below):
- The yield-to-maturity on the bond falls from 8.5% to 8%.
- The bond gets one year closer to its maturity.
- Market interest rates go from 8% to 9%.