e-bond: Bond Prices, Interest Rates, and Yield CurveWebsite:www.smartmoney.com

Professor A Etebari

1. Visit SmartMoney at www.smartmoney.com.

2. Click on "Economy & Bonds" on the menu bar at the top.

3. Glance through the page to learn about the economy and the bond market.

4. Click on the two dates below the graph to see what has happened to the yield curve this year. What can you tell from a comparison of the yield curves depicted here? Be sure to move the cursor on the blue line in the graph to see the rates for different bond maturities. To learn what the yield curve may be telling us, do step 9 below. 

6. From the menu on the left side, under News and Strategy, ck on "Bond Investing".

7. Click on "A Bond Primer" to learn more about bonds.

8. From the menu on the left side: Click on "Bond Calculator."Taking into consideration that bonds are quoted as a percent of par, e.g., 99 (for $990), keep changing the yield % and notice what happens to the price. What's the message? Now keep changing the Price. What happens to Yield %.What do you conclude from the results?

9.Back to “Bond Investing”. There, click on “Living Yield Curve”. What does an upsloping curve tend to foretell? What is the message in an inverted curve?