Determining the Zero Coupon Yield Curve: A Comprehensive Guide
The yield curve plays a crucial role in understanding the long-term borrowing costs for governments and corporations. It is used to price bonds, determine interest rates, and assess the health of an economy. The zero-coupon yield curve is a specialized type of yield curve that considers the yield rates of zero-coupon bonds, which are bonds that pay no interest but are sold at a discount to their face value.