BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is a line of graph plotting the yield of all maturities of a particular instrument.
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Yield curve changes its slope and shape from time to time.
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Yield curve can be twisted to the desired direction through the intervention of RBI.
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All of the above
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Detailed explanation-1: -What Is the Yield Curve Risk? The yield curve risk is the risk of experiencing an adverse shift in market interest rates associated with investing in a fixed income instrument. When market yields change, this will impact the price of a fixed-income instrument.
Detailed explanation-2: -A. It is a line of graph plotting the yield of all maturities of a particular instrument.
Detailed explanation-3: -Term structure of interest rates, commonly known as the yield curve, depicts the interest rates of similar quality bonds at different maturities. Convexity is a measure of the relationship between bond prices and bond yields that shows how a bond’s duration changes with interest rates.
Detailed explanation-4: -The yield curve is an important economic indicator because it is: central to the transmission of monetary policy. a source of information about investors’ expectations for future interest rates, economic growth and inflation. a determinant of the profitability of banks.
Detailed explanation-5: -A yield curve is typically upward sloping; as the time to maturity increases, so does the associated interest rate. The reason for that is that debt issued for a longer term generally carries greater risk because of the greater likelihood of inflation or default in the long run.