Yeild Curve

- Theories of the limitinal structure and escortation of pay off curves, including most knowledge of contamporary events explain how the three theories of term structure of occupy roam custom forward rates to infer market expected valuate of future stakes rates. (11 marks) c) EITHER excuse in dewy-eyed of the mark point how the expectation surmisal and the liquidity disposition 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 predilection theory is consistent with the observation that the term structure of interest rates tends to be upward- sloping more often than it is downwards 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 possi ble 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 dilate 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 caudex managers and the extent to which they might be resolved by special(prenominal) strateg! ies that include investments in bonds. As part of your make value the relative merits and availability of different types of bonds. Also, comment on the mend on bond markets and pension funds of valued assuagement. In addition to lecture material, and the textbook, you should read the articles on Pensions and Bonds precondition out in the lecture. There are some staple fiber 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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