1. Discuss the term structure and interest rate yields on Bonds. 2. Why is that bonds that...
Question:
1. Discuss the term structure and interest rate yields on Bonds.
2. Why is that bonds that are exactly the same in every other way except for their length to maturity, why do they have different yields?
3. Think about this for US government security, for example Treasury bills, treasury notes and treasury bonds. They are exactly the same except for their length to maturity. Why do they have different yields?
4. Why is that treasury bills short term government security usually have lower yields than treasury bonds that are long term government security? Why does that happen?
5. Why is that difference between what short term bond yield and long-term bond yield, why does that difference change?
6. Why does the term structure of interest rate change?
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe