Why do market participants in some countries prefer to use the swap curve rather than the government bond yield curve?
Answer to relevant QuestionsA client observes that a corporate bond that he is interested in purchasing with a triple A rating has a benchmark spread that is positive when the benchmark is U.S. Treasuries but negative when the benchmark is the LIBOR ...Answer the below questions. (a) What is a yield curve? (b) Why is the Treasury yield curve the one that is most closely watched by market participants? Why is a stripped Treasury security identified by whether it is created from the coupon or the principal? Suppose that the price of a Treasury bill with 90 days to maturity and a $1 million face value is $980,000. What is the yield on a bank discount basis? “A floating-rate note and an extendable reset bond both have coupon rates readjusted periodically. Therefore, they are basically the same instrument.” Do you agree with this statement?
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