J
Jesoos
Member
Hi
My question is about Ch.14, Q.14.19:
Q - Why might the government be particularly interested in the level and shape of the real yield cure compared with the gross redemption yield when issuing bonds?
A - The government will want to issue bonds as cheaply as possible. By looking at the real yield curve compared with the yield curve it may be able to identify the stocks that are the cheapest to issue.
Which stocks will be the cheapest - the ones where the inflation expectation is highest? i.e. the point where the two yield curves are the furthest apart?
Thanks!
My question is about Ch.14, Q.14.19:
Q - Why might the government be particularly interested in the level and shape of the real yield cure compared with the gross redemption yield when issuing bonds?
A - The government will want to issue bonds as cheaply as possible. By looking at the real yield curve compared with the yield curve it may be able to identify the stocks that are the cheapest to issue.
Which stocks will be the cheapest - the ones where the inflation expectation is highest? i.e. the point where the two yield curves are the furthest apart?
Thanks!