Inverted yield curve
A curve where short-term rates exceed long-term rates, caused by high policy rates to curb demand or by severe asset liability mismatch.
This one is not written up yet
The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.
Written up from the same chapter
- Call moneyUncollateralised overnight lending and borrowing of funds between scheduled commercial banks and primary dealers — the shortest segment of the Indian money market.
- Cash Management BillsVery short-term discounted Treasury Bills of under 91 days, issued by the Government of India to bridge temporary mismatches in its own cash flow.
- Convertible bondA bond carrying an embedded option that lets the holder exchange it for a specified number of the issuer's equity shares — a plain bond plus an equity conversion right.
- ConvexityThe curvature of the price-yield relationship — the correction duration misses, because duration is a straight line and the true relationship bends.
- Coupon yieldThe coupon payment expressed as a percentage of face value — the nominal interest payable on a fixed income security, fixed at issue and unaffected by what the bond later trades at.
- Current yieldA bond's annual coupon in rupees divided by its current market price — the cash income the bond throws off this year, ignoring any gain or loss at redemption.
Where this is taught
Free preparation for NISM Series X-A← All terms