Bond pricing and fund managemet - Essay Example

Comments (0) Cite this document
From Table 1 above, the forward rates of these bonds have been around 1% for the periods considered except on the 25th and 35th periods whose rate was…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.1% of users find it useful
Bond pricing and fund managemet
Read TextPreview

Extract of sample "Bond pricing and fund managemet"

Download file to see previous pages the amount of returns that an investor can earn from an investment, as well as the future changes as a result of economic risk associated with that particular investment can be established. For this reason, the above curve facilitates a significant comparison in bonds values.
The term structure of interest rates is also the yield curve and is a central element in modern financial and monetary economics. It is the variation of the bonds’ yield with identical risk profiles with these bonds’ terms2. The yield curve shows the relationship between bonds yield to maturity and the effective maturity. Bonds with longer maturities are considered to have higher yields. However, there are also opinions that the yield curve may be flat showing that the yield curve remains the same irrespective of the bonds’ maturity. Also, in some cases, bonds with short-term maturities have their yield curves inverted implying that they are higher than those of long-term bonds3. Notes that the bonds’ yield curve is influenced by several factors among them the fiscal policies, inflation, economic conditions, tax policies, foreign exchange rates, expected forward rates, bonds’ credit rating and foreign capital inflows as well as outflows.
The term structure of interest rates bears three identifiable features. They include higher volatility of yields on short-term bonds than long-term bonds; change in yields of various bonds move in the same directions; and the long-term bonds have higher yields. Several theories have been advanced to explain these characteristics. They are broadly classified as the market segmentation theory and expectations theories, which are the preferred habitat theory, the liquidity premium, and the pure expectation theory.
Given that bonds have some set durations, sellers and buyers frequently have preferred maturities. The bond buyers prefer maturities that coincide with when they need money or with their liabilities while the bond sellers want maturities ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Bond pricing and fund managemet Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Bond pricing and fund managemet Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from
(Bond Pricing and Fund Managemet Essay Example | Topics and Well Written Essays - 1500 Words)
Bond Pricing and Fund Managemet Essay Example | Topics and Well Written Essays - 1500 Words.
“Bond Pricing and Fund Managemet Essay Example | Topics and Well Written Essays - 1500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Bond pricing and fund managemet

James bond

...James Bond The official creator of James Bond, Ian Fleming, brought his hero to life in 1953. The rank title Fleming gave to James Bond was a Royal Naval Reserve Commander whose father was Andrew Bond and mother’s name was Monique Delacroix. The spouse’s name was Teresa di Vicenzo who was widowed. The son was named after James Bond’s name James USzuki Bond who was Kissy’s son in fact. Ian Fleming’s James Bond is a British national. This fictional character is the protagonist of James Bond series of films, novels, video games, and comics (Cork, 100-120). In Fleming’s novels, Bond is born...
8 Pages(2000 words)Essay

Strategic Managemet of Human Resources

...that it adopts. Some customers perceive well socially responsible corporations, which makes Microsoft fund numerous CSR activities (Aggerholm, Andersen & Thomsen, 2011, p 113). In evaluating the Microsoft Corporation in relation to the Michigan model, human resources take a centre stage in propelling Microsoft towards its strategic position and success. The performance tool, which is a web-based tool defines and roles, goals and commitments of both managers and employees. The corporation workers log into the performance tool system using their ID whenever they want to comprehend clearly of the organisational goals. Microsoft has seven core business units; Windows Client, Information Worker, Microsoft business solutions,...
8 Pages(2000 words)Essay

Bond ratings

...1. The higher the coupon rates, the higher the coupon payments and the higher the bond prices. The coupon rates for the various bonds vary so much because normally, the coupon rate is set equal to the going interest rate when a bond is issued (Weston, Besley, and Brigham 289). 2. Bond ratings are based on both qualitative and quantitative factors. Some of the factors considered by the bond rating agencies include the financial strength of the company as measured by various ratios, collateral provisions, seniority of the debt, restrictive covenants, provisions such as a sinking fund or a deferred call, litigation...
4 Pages(1000 words)Essay

A Bond

...A Bond When we speak of marriage, more often than not it bears a romanticized image, being that an ideal man would become a knight in a shining armor saving a damsel in distress from a life of helplessness. That is how the picture is portrayed even in fairytales, and unfortunately it has clung unto our consciousness, rooted in childhood, that we should see marriage as some sort of an escape from drudgery to sweep us unto blissful companionship. However, as I had previously implied, this is never really the case with real matrimony. And more often than not, it is not exactly because of love do people go off and get hitched. On the contrary, love is perhaps the last reason they would even consider, because in contemporary...
2 Pages(500 words)Essay


...Introduction: Pricing is an important factor in any business and it is this aspect that brings the product and its s together. There are different kinds of pricing for a company and the pricing strategy varies from a start up company and an established company. Pricing strategy is the task of the top management with the help of middle level and low level management. This is done by analyzing the local and the international market, clear method of analyzing the conditions where a successful marketing can be carried out. Pricing is the process of influential decision making on the benefits the company will earn on its business. Pricing...
6 Pages(1500 words)Research Paper

Questions in the Economics 2010 Course

4 Pages(1000 words)Assignment

Strategic Managemet the US. The stability of the economy in the US has significantly improved the operations of Starbucks which was not spared from the global economic recession that was witnessed from around 2005 to 2009, (FY11 Annual Report, 2011). Pricing of raw coffee is subject to volatility and this is one major economic factor that can affect the organization in its operations. The raw materials are sourced from other countries and their prices can be impacted by different factors which can also affect the performance of the final products on the market since the company can be forced to increase its prices if the market prices from the suppliers have been increased....
12 Pages(3000 words)Essay

Fund Transfer Pricing

...Application of funds transfer pricing to measure bank profitability Introduction Fund transfer pricing (FTP) is a process used by banks to measure the performance of the different business units in the bank. FTP measures and integrates the performance of the various units such as branches and the various sections and sub sections (Sinha 2008). FTP is a process that incorporates all the aspects related to how banks raise deposits and how they advance loans to customers (Dermine 2009). Banks use funds transfer pricing to determine the interest earned by their assets and liabilities (Abdallah 2004). Funds transfer...
2 Pages(500 words)Essay

Fund Transfer Pricing

...Business Finance Fund Transfer Pricing Financial institutions including banks operate in a highly competitive and complex landscape (International Banker 2014). Consumers are becoming more knowledgeable while brand loyalty is diminishing. Recent global turmoil in the financial sector has led to stringent regulatory restrictions and compliances (Bessis 2011). It is becoming difficult for banks to achieve growth amidst increasing capital requirements and unstable macro-economic conditions. These conditions have led to diminishing margins for banks and serve as obstacles to achieving sustainable profitability (Wyle & Tsaig 2012). This situation warrants players in the banking sector to review their...
2 Pages(500 words)Essay

The Effectiveness of Knowledge Management In Organizations

9 Pages(2250 words)Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Bond pricing and fund managemet for FREE!

Contact Us