BAFI1065 Money Markets And Fixed Income Securities - Assessment 3 Specification

Question

Part 1: (10 marks)

1. Describe the shape and level of the current Yield Curve in Australian Commonwealth Government Securities (i.e., at the time you decide to answer this question – use data gathered from Eikon and discuss it)

   Comment on its implications for Fixed-Interest fund managers.

   Based on your view of the yield curve and other sources, what is your opinion on Interest Rates in Australia for the following time horizons:

   • Six months
   • Twelve months (6 marks)
2. Describe the shape and level of the bond based zero-coupon curve in Australian Commonwealth Government Securities. Compare the current yield curve and the zero-coupon curve and Comment on the relationship between the two yield curves. (4 marks)