Question: What Treasury issues can be used to construct the theoretical
What Treasury issues can be used to construct the theoretical spot rate curve?
Answer to relevant QuestionsWhat are the problems with using only on-the-run Treasury issues to construct the theoretical spot rate curve? Explain the role that forward rates play in making investment decisions. Why do market participants in some countries prefer to use the swap curve rather than the government bond yield curve? Explain why it is inappropriate to use one yield to discount all the cash flows of a financial asset. In the fall of 2010, the author of this book received an offering sheet for very short-term Treasury bills from a broker. The offering price for a few of the issues exceeded the maturity value of the Treasury bill. When the ...
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