If the yield curve looks like the one in the image below


1. Using market analysis, show what will happen to the prices of bonds if in a pool of bonds with similar characteristics one set is insured against default and the remainder are not so insured, (an example would be student loans- some of which are guaranteed)

2. If the yield curve looks like the one in the image below, what is the market predicting about the movement of future short- term interest rates?

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Financial Management: If the yield curve looks like the one in the image below
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