Covered Bonds
February 12, 2025
Anyone working in the investment banking industry for a few years has definitely come across the term “leveraged buyouts.” It creates huge risks, as well as investment opportunities. Over the years, many investment banks have been involved in financing several big-ticket leveraged buyouts. In this article, we will explain in detail what a leveraged buyout […]
Prima facie, capital budgeting may seem like a very simple task. After all, it has just 3 steps. The first is to find the cash flows, the second is to find the appropriate discount rate that represents the time value and riskiness of those cash flows and the third step is to use both these […]
The retail sector is often considered to be a part of a single industry that has similar characteristics. However, this is not necessarily the case. It needs to be understood that the retail sector is very diverse. There are many different types of businesses which operate in this sector. These businesses have considerably different characteristics. […]
The creation of a financial model is like a project which has to be undertaken by the company. This means that just like any other project, testing the functioning of the financial model should ideally be included in the project. However, in most cases, testing the financial model is generally the last phase of the […]
When the word infrastructure project is used, it brings to mind images of bridges, railways, and even ports, which are considered to be essential for any country’s progress. However, this is changing rapidly. A lot of developed as well as developing countries around the world have started focusing extensively on infrastructure projects, which can be […]
Most investors across the world are aware of the fact that yield curves are generally upward sloping. This is because, under normal circumstances, yields for bonds with longer maturities tend to be higher. However, it is possible for the opposite scenario to play out. This means that it is possible for bonds with lower maturities to command higher yields than bonds with higher maturity. This is an abnormal situation that occurs only a few times in several years. This phenomenon is called an inverted yield curve and it is considered to be very important from an investor’s point of view.
The details about the inverted yield curve have also been explained in this article.
Since an inverted yield curve is an abnormal situation, it is important to understand why it arises.
The occurrence of an inverted yield curve is considered to be a big issue. As soon as this yield curve is spotted, it becomes part of the news. The reason behind the importance given to the yield curve is listed below:
The effects of the inverted yield curve are so significant, that their impact does not remain restricted to the bond market. Some of the details have been listed below:
To sum it up, an inverted yield curve is considered to be a major economic event. Almost all financial markets in the world are impacted by inverted yield curves in the long run.
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