Jul 17, 2017

# What conclusions might you draw about future interest rate movements from this yield curve?.

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# Bond Analysis

INSTRUCTIONS:

1. 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?.

2. 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%.

Summarize your findings in a three- to five- page paper (excluding title page and references page). Be sure to show your work. Your paper must be formatted according to APA style and it must include at least two scholarly sources (in addition to the text).

CONTENT:

Bond Analysis Name: Subject Date of Submission: Bond Analysis A yield is the annual return on an investment. It follows that yield curve could be elucidated as a graph depicting the correlation between bonds and their terms to maturity implying it is an important tool for fixed-income investors. Simply put, a yield curve is a graph of yields to maturity against the term to maturity (for bonds of the same quality and class). This owes to the reality that investors could use the yield curve when pricing bonds, forecasting interest rates, and creating strategies for improving the total returns. It is crucial to highlight that the yield on a bond depends on coupon payments received, and the purchase price for the bond. This paper discusses the yield curve using a graph plotted from data co

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