Idiosyncratic risk

Use data from the Federal Reserve Bank of St. Louis to plot the 10 year minus the 2 year Treasury rate. Describe what the current spread implies about the slope of the yield curve

Economics 2121 Pamela Labadie This assignment is based on the notes “Risk, Return and Leverage.” Securitization provides a way to diversify idiosyncratic risk. You are given an example in the notes of a $ 100 loan with a default rate of 5 %. For 100 households, 95 pay $115 and 5 pay nothing. The mortgage-backed […]

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