Chart your personal required yield curve vs. treasury yields. Write a paragraph with your observations and...

Chart your personal required yield curve vs. treasury yields. Write a paragraph with your observations and conclusions with respect to your personal investment decisions

Expert Solution

yield curve risk is the risk of experiencing an adverse shift in market interest rates associated with investing in fixed income instrument. When market yields change, this will impact the price of a fixed-income instrument. When market interest rates, or yields, increase, the price of a bond will decrease, and vice versa.

The yield curve is a graphical illustration of the relationship between interest rates and bond yields of different maturities, ranging from 3-month Treasury bills to 30-year Treasury bonds

Interest rates and bond prices have an inverse relationship in which prices decrease when interest rates increase, and vice versa. Therefore, when interest rates changes, the yield curve will shift, representing a risk, known as the yield curve risk, to a bond investor.

The risk of holding treasuries is interest rate risk. If you hold the security until maturity, interest rate risk is not a factor. You'll get back the entire principal upon maturity. But if you sell your treasury before maturity, you may not get back the principal you paid for it.

So Difference Between a Bond's Yield Rate and Its Coupon Rate is a bond's coupon rate is the rate of interest it pays annually, while its yield is the rate of return it generates. A bond's coupon rate is expressed as a percentage of its par value. ... To purchase a bond at a discount means paying less than par value.

ekkarill92 answered 1 month ago

The Treasury yield curve plots the yields on Treasury notes and bonds relative to the ____...

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