time varying rates of return and yield curve


  • annualized rates of return- standard practice to quote annual rate 
  • time varying rates of return and the yield curve 
  • present value with time-varying interest rate 
  • based off us treasury 
  • time varying rates of return and the yield curve 
  • inflation 
  • effect of rising prices without an increase in purchasing power 
  • real term 
  • actual increase in purchasing power 
  • nominal term 
  • nominal growth = (1+rate of inflation)* (1+real growth)-1
  • time-varying rates of return and the yield curve 
  • treasury bills- maturities up to 1 year 
  • treasury notes - maturities between 1 year to 10 years 
  • treasury bonds - maturities greater than 10 years 
  • yield curve shapes 

Comments

Post a Comment

Popular posts from this blog

corporate claims

firm value = liabilities + equity  claims on firm ( liabilities+ equity) : capital structure  financial claims  debt liabilities  equity  non financial claims  other liabilites  liabilities have higher priority over equity  debt is cheaper than equity  corporate claims  cash flow rights of claim owners  describes how firm-generated cash will be allocated to claims  liabilities have higher claim priority over equity  control rights of creditors  force the firm into bankruptcy if firm doesn't pay obligations  covenants ( positive or negative) control rights of stockholders  vote new board of directors to replace old board  board of directors appoints managment team  corporate claims  financial claims - debt  straight - pays interest regularly and principal at maturity  convertible - right to exchange bonds for a number of shares  covenant - conditions...
Read more

midterm 1 notes

Image
Corporate Finance the law of one price - impact on local and global commerce theory versus reality -  consequences of wrong prices valuation practices ( highest and best use standard) DCF ( expected cash flows, discount rates) market comparisons( closeness of comparable, strength of attributes, etc.) asset or cost ( not visually applicable for most "going concern" entities goal of finance : valuation Valuation is forward looking ( perspective) Today's price is dependent on future cash flows into infinity historical performance guides our ability to predict future expectations finance studies the measurement of values limitation of finance useful only when elements are quantifiable in monetary terms inability to measure significant qualitative values ( e.g. internal, employee loyalty, etc.) Time Value of Money perfect market assumption no difference in opinion same relevant information is all know to market partici...
Read more

chapter 5 homework

5.22: Over 2 years you would have either owned 16.6% or 16.4% because (1+6%)(1+10%)-1=16.6%or (1+3%)(1+13%)=16.4% .Over 5 years you would get   115.5% or 1078 for stock and and 113.6% or $1068 for stock B 5.24: The compounded geometric rate of return is 12.9%. The average arithmetic rate of return is 13.4%. The arithmetic average is always the preferred number because it is always the higher number 5.26: r5=10%(1+r0,5)(1+r5)^5=1.6105making the 5 year total return 61.05 5.28 a.) 85.03 b.)6.35%   1.0635^10=1.8503
Read more