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Three Shapes of the Yield Curve | Finance Train

Fixed Income Part 1

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17 lessons0%

CFA Level 2: Fixed Income Part 1 – Introduction

Principles of Credit Analysis

High Yield Corporate Debt (aka Junk bonds)

Analyzing Credit of Asset Backed Securities

Analyzing Credit of Municipal Bonds

Three Shapes of the Yield Curve

Parallel and Non-parallel Shifts in Yield Curve

Factors Driving Treasury Investment Returns and Bond Price Risk

Yield Curve Construction with Treasuries

LIBOR Swap Rate Curve

Theories of the Term Structure of Interest Rates

Key Rate Duration

How to Calculate Interest Rate Volatility?

Benchmark Yield Spreads

Valuing an Option Embedded Bond using Binomial Interest Rate Tree

How to Price Convertible Bonds?

Lesson 7 of 17

Three Shapes of the Yield Curve

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Sovereign Debt

Parallel and Non-parallel Shifts in Yield Curve

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Term Structure of Interest Rates: The term structure of interest rates is the relationship between the spot rate of U.S. Treasury securities and their time until maturing.
Yield Curve: The relationship between U.S. Treasury yields and time to maturity.

Three Shapes of the Yield Curve

Positive Slope: Short term bonds have lower yields than long term bonds. Because a longer borrowing time frame entails greater uncertainly, a positively sloped yield curve is considered "normal."
Flat: Yields across the spectrum, primarily from two year to thirty year are all about the same.
Inverted (negative slope): Longer term bonds have lower yields than short term bonds. This scenario is associated with anticipation of dropping interest rates in expectation of a recession.