YIELD CURVES Plots interest rates on different securities of similar default risk for a given day Used to demonstrate the difference in interest rates based on time to maturity - Upward sloping curves show securities with longer times/higher yields to maturity. Figure 5.5 Yield Curve for February 15, 1997 7 2 10 15 20 25 30 Time to Maturity (Years) Yield to Maturity (Percent)
YIELD CURVES Plots interest rates on different securities of similar default risk for a given day Used to demonstrate the difference in interest rates based on time to maturity - Upward sloping curves show securities with longer times/higher yields to maturity. Figure 5.5 Yield Curve for February 15, 1997 7 2 10 15 20 25 30 Time to Maturity (Years) Yield to Maturity (Percent)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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can you explain to me the chart, especially how you read it.
Transcribed Image Text:YIELD CURVES
Plots interest rates on different securities of similar default risk
for a given day
- Used to demonstrate the difference in interest rates based on time to maturity
- Upward sloping curves show securities with longer times/higher yields to
maturity.
Figure 5.5 Yield Curve for February 15, 1997
8.
7
1
10
15
20
25
30
Time to Maturity (Years)
Yield to Maturity (Percent)
Transcribed Image Text:SHORT- & LONG-TERM INTEREST
RATES
Short- and long-term interest rates generally move in the same
direction
Short-term rates tend to be more volatile and lower than long-
term rates
Figure 5.4 Short- and Long-Term Interest Rates
20
18
16 F
14E
Long-term
(10 Year)
Interest Rate
4
Short-term
(3 Мonth)
2
Interest Rate
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
Date
2.
6.
Interest Rate (Percent)
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