Which of the following shows relationship between market yield and time to maturity?
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A. B. C. D.C
The relationship between market yield and time to maturity is commonly represented by yield curves, which is option C.
A yield curve is a graphical representation of the relationship between the yield of a fixed-income security and its time to maturity. The yield curve plots the yields of similar quality bonds against their maturities, typically ranging from short-term maturities of one month to long-term maturities of thirty years or more.
In a normal yield curve, yields on short-term maturities are lower than yields on longer-term maturities. This is because investors demand higher compensation for the increased risk of holding a security for a longer period of time.
The yield curve can also provide insights into market expectations for future economic conditions. For example, an inverted yield curve, where yields on long-term maturities are lower than yields on short-term maturities, may indicate an expectation of economic slowdown or recession.
Smart curves and Bezier curves are mathematical curves used in computer graphics and design, but they are not directly related to financial markets or the relationship between market yield and time to maturity.
Filling curves are a type of data visualization technique, but they are also not directly related to the relationship between market yield and time to maturity.