Visit http://www.bondsonline.com/ to complete the project below. You will be particularly interested in "Today's Market" and the "Corporate Bond Yields" sections.

Project

Draw a yield curve for each of the main bond classifications (Treasury, Corporate, Municipal, and Foreign) you saw from the Bonds Online website, placing them on the same graph. (The X-axis of the graph will show years to maturity and the Y-axis will show the yield.) For the corporate, municipal, and foreign bonds, you should assume AA bond ratings. You may have to estimate the yield curve for the foreign bond, but it should be an "educated" estimate developed from your other yield curves. Once you have assembled your graph, answer the following questions:

In terms of the risk included in each bond, do your yield curves make sense? If not, explain why not, and the reason that this "problem" occurs.
Redraw the yield curves, but now assume that the investor purchasing these bonds is in the 28% tax bracket. How do your yield curves differ from those first ones you drew?

Assuming a real risk-free rate of 2% and a MRP +0.1x(t)%, t is the # of years to maturity, estimate the interest rate in Jan 1981 on bonds that mature in 1,2,5 and 20 years, and use Excel to draw a yieldcurve based on this information.

Which of the following is most correct?
a.If the expectations theory is correct (that is, maturity risk premium = 0) then an upward sloping yieldcurve means that the market believes that interest rates will rise in the future.
b.A 5-year corporate bond may have a yield less than a 10 year treasury bond.
c.The yield c

1) a. Suppose you are considering two possible investment opportunities, a 12-year Treasury bond and a 7-year, A-rated corporate bond. The current real risk-free rate is 4%. Inflation is expected to be 2% for the next two years, 3% for the following four years, and 4% thereafter. The maturity risk premium is estimated by this fo

Which of the following would most likely increase the slope of the yieldcurve?
a. An increase in the rate that prices are expected to increase over the next 30 years.
b. A decrease in the risk-free interest rate.
c. An increase in the risk-free interest rate, where the increase is the same amount for all maturity dates (e.g.

I have 2 questions I need help with:
1. Should a yieldcurve influence a borrower's preferred maturity of a loan?
2. Should there be a global Central Bank?

Nominal interest rates and yieldcurves A recent study of inflationary expectations
has revealed that the consensus among economic forecasters yields the following average annual rates of inflation expected over the periods noted.
(Note: Assume that the risk that future interest rate movements will affect
longer maturities mo

Imagine you are a money manager hoping to accumulate portfolio yield. Since you anticipate that the current short-term interest rates will increase more than the current yieldcurve, explain whether you would you rather pay a determined long-term rate and have a floating short-term rate or vice-versa.

1. If U.S. Treasury yields are as follows:
3 month 6.0%
6 month 6.3%
1 year 6.5%
2 year 6.6%
5 year 6.4%
10 year 7.5%
30 year 8.0%
a. What is the expected yield on notes from year 1 to 2, assuming the PEH holds?
b. What is the expected yield on notes from year 2 to 5, assuming th