Yield Curve. Yield Curve The yield curve is defined as a “graph that plots the yields of similar-quality bonds against their maturities, ranging from shortest to longest” (Investing Answers, 2011, par. 1). From the Bloomberg website, the yield curve as of 8 April 2011 is depicted below: Source: Bloomberg, 2011 Using the yield curve, today’s financial marketplace expects interest rates to remain steady over the near future with short term yields generating lower returns than long term yields.
The last traded price of the stock of Wal-Mart Stores Inc. is $53.19 on 29th August, 2011. The price of the stock at the same point last year was $50.55. The price has shown an increase of 5.22% in the past one year. During the year the stock has been at a high of $57.57 and a low of $48.41.
While in practice the consumer may go in for a particular combination of the two goods(quite irrespective of the utility derived) the indifference curve carries hypothetical consumption states strictly for analyzing and exhibiting a manner in which consumption decisions are reached.
The horizontal and vertical axes of indifference curve graph represent the quantities of goods a consumer might consume, and the indifference curve itself represents a contour along which utility for that individual is constant. Indifference curve varies from one consumer to another, which is due to their personal preference.
One of the determinants that causes a shift in the demand curve is income (Dominick, 2003; Ken, 2001; Sloman, 1994). The income that one refers to is the disposable income. Disposable income is income after taxation. The ability of households to buy goods and services is based on their income.
The author of the essay emphasizes that the inverted yield curve is a rare phenomenon, and indicates that bonds with longer-term maturities command lower interest rates as compared bonds with shorter-term maturities. It is also mentioned that ‘Inverted yield curve’ is an indicator of pessimism being creeping into the behavior of economic set up of a nation.
If we compare the price movement of the stock with that of the S&P 500, NASDAQ and Dow Jones Industrial Average, we see a positive correlation between the stock price and the three indices. The stock prices have moved with the market in the past one year. But on the