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    Yield Curve

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    I have 2 questions I need help with:

    1. Should a yield curve influence a borrower's preferred maturity of a loan?
    2. Should there be a global Central Bank?

    © BrainMass Inc. brainmass.com June 4, 2020, 2:48 am ad1c9bdddf

    Solution Preview

    1. A yield curve should indeed influence a barrrower's preferred maturity of a loan, due to the fact that the yield curve provides information on the interrelationship between the relevant cost overhead of borrowing a specific amount of money, and the time that a specified loan matures. Due to the fact that the cost of borrowing the money, or the interest rate, tends to increase commensurate with the longevity of the loan term, it is usually in the best interest of a borrower to attempt to ensure that their maturity date on is of particular loan is as short as possible. The yield curve is the best methodology by which ...