Assignment
Instructions
Examine some important theories and concepts associated with interest rates. Safe investments usually have fixed interest rates. You have been asked to assemble this presentation for a weekly staff meeting, so your audience will be senior managers and a couple of vice presidents. Note their interest in this topic is very high so you need to be very succinct and clearly explain the risks and rewards of building a successful portfolio. In reference to term structure, interest rate risks, and duration supported by numerical illustration where applicable, in a PowerPoint presentation, evaluate the following:
1. The pricing of bonds, the calculation of the bond yield, and how bond prices adjust across time for premium, par, and discount bonds.
2. An evaluation of the yield curve and the theories to explain the shape. Discuss how these theories can be helpful in bond investing.
3. The interest rate risk for bond investments. Form a graphical presentation of the concepts.
4. The concept of duration and how it is useful in the context of bond portfolio analysis. You want to clearly discuss both the price risk measurement value for duration as well as how duration can measure the dynamics of price and re-investment rate risk across time for a bond portfolio.
It is critical that with each discussion above that examples are formed to illustrate the concept. Whenever possible, you want to demonstrate concepts using graphical approaches.
References:
CHAPTER SIXTEEN: Managing Bond Portfolios
Youtube Video: "Investing in Bonds"
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.