Term Of The Week
What is yield curve
Jan 14, 2019Yield curve is also known as the term structure of interest rates. It is a line chart showing yields of bonds of different maturities. The chart below shows the yield curve of Indian Government bonds. The X-axis (horizontal axis) represents residual maturities of different bonds, while the Y-axis (vertical axis) represents... Read More
Repo Rate
Jan 7, 2019Repo rate is the benchmark interest rate in our economy. Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks, in case there is a temporary shortfall in funds. If the repo rate increases, there is less incentive for banks to borrow money from the RBI. Repo rate hike... Read More
Credit Spreads
Dec 24, 2018Credit spread is the difference in yield between two bonds of similar duration (maturity), but different credit qualities. Government bonds are backed by sovereign guarantee and therefore, have no credit risk. Corporate bonds, on the other hand, have credit risks and hence, offer higher yields... Read More
Corporate Bond Funds
Dec 17, 2018Corporate bond funds are debt mutual fund schemes which invest in corporate bonds or non-convertible debentures. Since corporate bonds are subject to credit risk, their yields are higher than those of Government bonds. The returns of corporate bond funds are therefore, usually higher than debt mutual funds... Read More
Types of debt mutual funds: Dynamic Bond Funds
Dec 10, 2018Dynamic bond funds are debt mutual fund schemes which invest across durations depending on the interest rate outlook of the fund managers. When interest rate regime is favorable, these schemes invest in long duration bonds which can give high returns when yields decline. In rising interest rate scenarios, these... Read More
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