The term- structure of U. S. Treasury interest rates generally exhibits certain shapes during different stages of the business cycle. Discuss this relationship and explain why it holds, on average. What shape does the yield curve take prior to a recession in the United States?
Answer to relevant QuestionsExplain how a OBHC differs from a MBHC. How does each of these differ from a financial services holding company? What rationale suggests that a contra cyclical investment strategy should, on average, outperform the market? Is it possible to consistently earn above- average returns by timing security purchases? Describe the basic strategy in riding the yield curve. Can you ride the yield curve if the yield curve is downward sloping with short- term rates above long- term rates? Explain how the composition of a small community bank’s investment portfolio differs, in general, from the composition of a large bank’s portfolio. Why might mutual funds be attractive to banks? Why were IBFs created? How do they differ from Edge Act and Agreement corporations?
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