apologize how the three theories of term structure of occupy roam usage forward rates to infer market expected value of future interest rates.
(11 marks)
c) EITHER excuse in wide of the mark point how the expectation theory and the liquidity sense of taste theory would interpret the yield curve in table 2 above, and why.
e)Explain how the expectations theory and the market liquidation theory would interpret a down(prenominal) slopping yield curve.
(8 marks)
(e)Discuss why the liquidity preference theory is consistent with the observation that the term structure of interest rates tends to be upward- sloping more often than it is downward sloping.
(9 marks)
(c) Discuss the yields in table 2 with reference to theories of the term structure of interest rates.
(12 marks) (JAN2009)
Q5Comment on the possible reasons for the process of the yield curve based on the data in Q1.
(e)Explain why duration matching might be recommended as a method of stand by portfolio management.
Explain in detail the concept of duration and how bond managers can use this concept to protect bond portfolios from interest rate risk.
(12 marks)
(e)Explain the immunization strategies which may be followed by a bond portfolio manager in order to shed her/his liabilities from interest rate risk.
(10 marks)
Tutorial 3
Explain and discuss the problems faced by subsidy fund managers and the extent to which they might be resolved by specific strategies that include investments in bonds. As part of your make assess the relative merits and availability of different types of bonds.
Also, comment on the impact on bond markets and pension funds of valued Easing.
In addition to lecture material, and the textbook, you should read the articles on Pensions and Bonds given out in the lecture. There are some basic lecture notes on quantitative easing. There is in like manner a lot of media...If you want to get a full essay, order it on our website: Ordercustompaper.com
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