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Which of These Processes Is Essential for All of the Rest

question 11

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Which of these processes is essential for all of the rest to happen?


Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.

Forward Interest Rate

Rate of interest for a future period that would equate the total return of a long-term bond with that of a strategy of rolling over shorter-term bonds.

Yield Curve

A graph that plots the interest rates at a set point in time of bonds having equal credit quality but differing maturity dates, typically used to predict economic changes.

Maturity

The fixed date in the future at which the principal amount of a bond or other financial instrument is scheduled to be repaid.

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