The yield curve shows a declining trend of Average Interest Rates for both the marketable and the non-marketable treasury securities in the US security market. It shows a negative gradient on the curve for a period of 13 years for the purpose of making qualitative comparison. For the entire period, the best period of interest for trading is 2013, since the interest rates are on the rise yet the results are for the yields for the first half of the year. It is a declining performance indicator showing that the interest rate is likely to continue falling in the coming years if all factors remain constant. The average rates of interest for the US Treasury Securities are computed using the total debts that are bearing interests, though they are not matured. There are certain US securities that are not included in the calculation of the average rates of interest, overall marketable and non-marketable debts as well as debts that bear interests. This is because these US securities do not have protection against the effects of inflation according to Fabozzi (2008). Question 2: Answer The description of the interest rates trend over the past many years is a derivative of the interest rates shown in the table below. Maturity Year Interest Rate 1987 5.78 1988 5.452 1989 5.164 1990 5 1991 4.6789 1992 4.548 1993 4.244 1994 3.94 1995 2.988 1996 2.132 1997 1.969 1998 1.827 1999 1.478 2000 1.432 2001 1.3979 2002 1.2 2003 1.177 2004 1.089 2005 1.054 2006 0.947 2007 0.859 2008 0.67 2009 0.36 2010 0.15 2011 0.134 2012 0.087 2013 0.04 2018 0.01 Figure 2: Interest Rates Interest rates in the curve are in a continuous trend of gradual decrease from 1987 to 2013, with a projected forward movement projected in the years after 2013. The period shows results for the last 28 years. The only year that indicates a drop is 2012, perhaps caused by temporary factors based on the market variables of the US Treasury Securities. The securities market is heading to a point where the rates are constantly reducing. The same trend is presented in the report by the head of research on securities and rates in the global scene. The research team explained that the rates of interests fell within ten years at a rate of 1.58 percent per year because investors turned to government debt in an attempt to salvage the future of their businesses (Slane, 2004). The decline in the interest rates and yields is caused by the increase in treasury prices. Interest rates proceeded to reduce further as years moved on and the global banks attempt to maintain rates at their lowest in order to encourage their economic growths and encourage more lending (Friedman, 2004)). Even so, the view of reducing the speed of growth of the globe moves the rates to lower values, considering the demand which investors have for trading with safer assets. Question 3: Answer The trend shows that the interest rates progressively drop by 1.58 percent every year. It implies therefore that in 2013, the interest rate will be: Interest Rate = ((100 – 1.58) / 100) * 0.04 Interest Rate = 0.039368 The calculation can only be justified theoretically, using the hypothesis that the interes
Plotting the Current Yield Curve Question 1: Answer Plot of the Normal current yield curve The yield curve for interest rates of US Treasury is generated from the information generated from WSJ. It is the yield for the most current trading results of various treasury securities in the US…
Banks were asked to invest only to investment grade bonds that are equivalent to “BBB” or better on the Standard and Poor’s scale. Junk bonds are corporate bonds with highly unfavorable ratings from major rating agencies.
This research paper has covered various areas of interest, which can help us understand more regarding the current entrepreneurship. The paper looks into the entrepreneurial role in the economy, and especially using the current entrepreneurial skills like internet use, which has turned the whole world a global village.
This is not good news for social welfare, which will probably find itself being cut back over the next few years. Very few elements of the United States budget are going to be immune from drastic cuts, so long as the Republicans maintain some control of Congress.
(Asrar et al, 1985, Botkin et al, 1986, Asrar et al, 1992, Broge et al, 2002). Predicting the yield ahead of the harvest time is associated with the capacity not only to identify the crop species of interest but also to determine values of agronomic variables like maturity, population density, vigour, disease, and weed infestation.
The GDP growth rate of the U.S in 2009 and 2010 were -2.63% and 2.8% (CountryWatch, 2012). The most recent data shows more positive signs in terms of gross domestic product. During the 3rd and 4th trimesters of 2011 the GDP growth rates of the United States were
Moreover, it is capable of overcoming and identifying obstacles to work and progress within operational, budget and time constraints. Lastly, it focuses on learning curve that acts as a powerful tool ensuring the profitability and
High-yield bond portfolios focus on lower level quality bonds, which are riskier than those of higher-quality companies. These portfolios for the most part why for the most part offer higher yields than different sorts of portfolios, yet they are likewise more helpless against economic and credit risk.
when the government is honest and friendly to its people as it happens at the beginning of a dynasty, taxation obtains large returns from small valuation. Ibn Khaldun clearly envisages the effect of tax on enticements and productivity that he appears to understand the concept of
10 pages (2500 words)Research Paper
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