Introduction to the yield curve | Stocks and bonds | Finance & Capital Markets | Khan Academy

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Introduction to the treasury yield curve. Created by Sal Khan.
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Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
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Опубликовано:

15 мар 2008

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Комментарии : 170

@cristobaltrujillohermosill1473 3 года назад

Bro this dude knows everything from physics, calculus, linear algebra to finance, etc.

@neodyinrich 3 года назад

factss

@jereicahhess6864 3 года назад

Hahahaha that's what I was thinking!

@hawkeye4469 3 года назад

Sal knows everything

@Son_of_Adam_07 2 года назад

His team members bro

@Tarequr 2 года назад

@@Son_of_Adam_07 even if it’s his team doing all the research, the man knows how to break things down into simple digestible concepts. I think that’s genius!

@khanacademy 16 лет назад

One mistake in the video. T-bills are for maturities up to and including 1 year. T-notes are for 2-10 years (I mistakenly said that the 1-year maturity would be a t-note)

@thewolfeofrealest8 6 лет назад

you're still AWESOME!

@hugopasqualdelpobil4224 3 года назад

It’s okay

@markkaminsky4943 3 года назад

No worries, still the best video on this subject

@derbygirle 2 года назад

So it is essentially up to and including the 24th month?

@jackpalen7292 5 лет назад

Gotta learn this quick before the economy collapses

@zaynumar0 4 года назад

Hahah

@chrisgonzalez5455 4 года назад

Um. Yep.

@MattsPath 4 года назад

This was prophetic.

@leonardobassino3719 4 года назад

man I hope you did considering the situation lol

@cryp0g00n4 4 года назад

did it really collapse or just shuffle. I think economic collapse basically means becoming a skeleton. That's not even physically possible. If a prisoner can trade saltine crackers in a jail cell for the top bunk, I'm sure we can figure out a way to do stuff with no government.

@colleen.odegaard 10 месяцев назад

"The market and the risk assets in particular price for somewhat of a goldilocks, soft-landing type scenario, I do have about $300k amount of capital to start up but I have no idea what strategies and direction I need to approach to help me make decent returns

@Shultz4334 10 месяцев назад

A solid strategy can be a key component of an investor’s portfolio. That way your investment is balanced and you don’t get to make so much losses.

@DanLeahfort 10 месяцев назад

Speaking with an advisor helped me stay afloat in the market and grow my portfolio to about 65% since January, and in just a few months, I was able to earn over $350K in net profit They have strategies that are specifically suited to your long-term objectives and financial aspirations.

@TeresaBrickle 10 месяцев назад

Amazing! Could shed more light or info on how you came along such world class expertise and how to possibly get across to this aforementioned individual?

@DanLeahfort 10 месяцев назад

I’m a realtor, and my job doesn’t permit me the time to properly analyze my holdings/evaluate stocks myself, so I’ve had a fiduciary " *Monica Selena Park* " actively restructuring my portfolio now to match the present market condition and that’s how I’ve been able to stay afloat, knowing when to buy and sell…maybe you should do the same.

@TeresaBrickle 10 месяцев назад

Thank you for this tip , I must say, Monica appears to be quite knowledgeable. After coming across her web page, I went through her resume and I must say, it was quite impressive. I reached out and scheduled a call

@shakaama 11 лет назад

hey Khan you should make videos for the CFA JUST FOR ME :) I literally am banging my head on my keyboard to try and get the information in. The books are BORING. I am rereading each paragraph like 5 times. It just is not sinking in.

@davidcliff2141 5 лет назад

Guess this is relevant again

@JackCorsellis 5 лет назад

I'm doing videos showing the best place to be given current conditions. Would welcome your feedback David. JC

@superagario9249 5 лет назад

Isn’t it something! We’ll never learn...unbelievable!

@stuieblack 3 года назад

More today

@kevngu7256 3 года назад

And again

@Ofure127 13 лет назад

Khan, your tutors are so insightful. this really is a revolutionary achievement. Keep it up.

@jasonaltice9920 2 года назад

Finally! I got an explanation of how interest rates are determined. That seems to be the biggest key to understanding how inverted curves predict recessions. None of the other videos I have watched have included that bit. Thanks!

@Gabby-it7nl 5 месяцев назад

Hi can u elaborate on that please

@veshalgohil8298 5 лет назад

Your videos are really very helpful to understand things in finance

@derbygirle 2 года назад

This was a GREAT first look for me at this, thx! I look forward to looking through all your teachings:)

@invasions 15 лет назад

Wonderful presentation. Many thanks for your time putting this together for us.

@Bismarkdee-b9n 11 дней назад

I came across your channel through this video-case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.

@christiankurian9219 4 года назад

Watching this for a quick overview on this for my MBA finance class. Then I notice this is from 2008. I'm like whoa. In the MBA classes, we always talk about 2008 like it's WW2 lol

@danthemann6565 Год назад

Excellent demonstration of the yield curve. Thank you

@cryp0g00n4 4 года назад

This was a really good intro, thank you!

@PunmasterSTP 2 года назад

Yield curve? More like "Yes, I'm glad I heard!" Thanks for sharing so much wonderful information on *so* many topics!

@indubitablesb 12 лет назад

Cleared the topic in just 15 min...thanks

@LeahElizabeth 14 лет назад

Why would the two year rate be greater than the one year rate? There are two basic reasons: 1. If inflation is expected to be higher-the expectations hypothesis 2. If investors prefer short-run investment horizons and need to be enticed (with higher rates) to buy longer maturities-the maturity preference hypothesis.

@elieone 15 лет назад

thank you for all your videos, great stuff

@kevindebruyne17 Год назад

Crazy how this video was shot in March 2008 and a recession hit in the coming few months. I’m watching this in Jan 2023 and people are talking about an incoming recession this year. Only time will tell! Take care folks!

@musak.4068 Год назад

Check the market today.

@joshuaasuquo6322 5 лет назад

Good teaching, good learning.

@Distinguished-Gentleman 5 лет назад

Very well spoken and explained Thanks

@thestockmarketchannel8086 5 лет назад

Khan, are you going to make an updated video on the yield curve since it's now inverted here in the US?

@knoxkiernan6463 7 лет назад

Could be a good opportunity to discuss points of inflection.

@Dopenyc1 5 лет назад

Very good I learned a lot thank you very much

@achempim2023 6 лет назад

awesome presentation .thx

@Javssoccer 5 лет назад

8:08 to 9:27 (very useful for rate determination/pricing)

@AkshayBhatnagar 14 лет назад

Wonderful!!

@gustavom8726 3 года назад

You have it always so clear

@Daffh099 6 лет назад

I love you voice :-) communication is very clear :-)

@09ThunderOne 6 лет назад

Prepare for this video to get a lot more views

@Aj.- Год назад

thank you they are helpful to me as a trader

@rramos7488 5 лет назад

thank you for the quick break down sir!

@BrockJamesStory 5 лет назад

Yes we're screwed!!!

@Jay-jq6bl 4 года назад

When you have spreadsheets in your content, can you please have a higher resolution?

@JustMe-ro1be 2 года назад

Superb videos. Thank you

@eds550 13 лет назад

good one Mr Khan

@esotericcommonsense6366 2 месяца назад

Bro really made this before the great crash

@amitsingh-rv4hz 5 лет назад

Does the Yield Rate reveals the risk perception of the Bond Buyers ?

@MominNz 5 лет назад

so in theory is yield and yield curve different? is yield and current yield same? is yield and interest rate same? is the yield curve and interest rate the same?

@shwetatawlare7452 3 года назад

This is great.

@muditjain7667 6 лет назад

This is just before the recession(march 2008) and the 1-month, 3-month yield curve is starting to getting inverted!

@sriraghavanrajamannar4156 Год назад

very WELL explained - why the quality of the video at 240p understand this video is taken 15 years ago can we update the video

@subirdas0 2 года назад

It’s a published post sell transaction metric. Buy back has related implications?

@naderaltammami8770 7 лет назад

Great video.At least gained something.Thanks

@alisheikh3585 5 лет назад

at 8:20, shouldn't it be depending on the supply rather than demand, as the investors are suppliers? And that also stands with the economic perspective, higher the supply, lower the rate and vice versa

@ShineForlyn777 12 лет назад

Where do you teach? Wow! I have been in my text for hours trying to make sense of this (currently taking Financial Inst and Society), and it's been difficult to understand in simple terms. Thank you, you have great communication skills an absoultely marvelous voice! Thank you so much!

@PunmasterSTP 2 года назад

Hey I know it's been years (and actually a decade), but I just came across your comment and I was curious. How did the rest of your education go, and how have things been going since then?

@ShineForlyn777 2 года назад

@@PunmasterSTP Hi Samter, wow yes a decade. Well I went on to complete a masters in clinical mental health in 2019. I still need to study for the NCE to become licensed, but having a very hard time focusing so it's been really slow for me.

@PunmasterSTP 2 года назад

@@ShineForlyn777 I see, and I wish you the best! It sounds like you are/you'd be doing very important work.

@alyssag8828 Год назад

Love this 10 year response:)

@Atlhas 7 лет назад

I would like to address a question regarding the relation between the demand on bonds and the interest rates. Why does the interest rates go lower when you have more demand? Does it have something to do with the fact that if more people have the T-bill/note/bond the government will have more expenses with the higher interest rate?

@kuikyroje 6 лет назад

Due to inverse relationship between Yield and Price of Bonds, I think

@zaynumar0 4 года назад

Much love sal

@hotamtoy5287 3 года назад

The vertical line Coupon payment or Yield to Maturity?

@heigio123 2 года назад

So if demand leads to spike in price, yield drop as coupon rate is fixed. That's why inverse relationship between price and yield.

@deepsarkar3888 6 лет назад

Does the government/ fed calculate or take into consideration the time value of money while determining the yield?

@kaneknight4606 5 лет назад

Government doesn't determine the yield, the market does.

@olipop84 14 лет назад

can yuo explain the iverted yield curve?

@zakkarp674 3 года назад

Are the points on the yield curve referring to the yield to maturity?

@fleshcookie Год назад

"We're going to borrow a billion dollars from you because we can't control our spending" Sal cracks me up

@panghouavang4077 4 года назад

Thanks

@benwarnock 6 лет назад

Awesome! Thanks for teaching me what the yield curve is. But are the loans to the government really a safe investment as government debt is exponentially increasing?

@MasterHolmstrom 5 лет назад

Ben Zemła no

@mrjaywilliams7729 15 лет назад

The only worrying thing is that previous bonds paid off are being financed with new bonds issued . Not good for treasury's credit rating, and it won't be too long before foreign buyers of govenment bonds wise up.

@andychu84 15 лет назад

wonderful!!!

@danielrosen4496 Год назад

What happens if U took out a 20 year Federal Note ($1000) at say 10% and U decide U need Ur money back after 10 years. How much do U get back? Does the interest U get back change to a lower amount?

@junyanyang982 2 года назад

Me watching this 13 years later.

@edwinbab705 Год назад

What's good to invest for gold is gold or gdx ok

@juancuelloespinosa 3 года назад

8:00 nice underhanded jab 😏

@HKHasty 4 года назад

"dollar might collapse.." says it so casually

@habali08 5 лет назад

nice work, just please increase the video quality

@rocnaymo 5 лет назад

it was done 11 years ago...

@drew2f 2 года назад

Hi I'm from the future, 2021. Preparing for the next market crash.

@ferrariscuderia4290 4 года назад

Freudian slip at 07:50 lol!

@fredericp64 3 года назад

super

@vvpChannel3112 4 года назад

what is bootstrapping sir ?

@Nandine2 16 лет назад

Do you have any videos on Algebraic Long Division? could not find them in the algebra section. good video btw..

@321ian 2 года назад

Small nit pick, but I think Sal mixed up the terminology at 8:30. The market/product is essentially money/loans (to be used for government spending), and the currency are the treasuries. So the supply is the investors willing to loan their money, and the demand is the government who needs money to pay for things. It would be that a higher supply of investors lowers the yield of the treasury, not the demand.

@musak.4068 Год назад

You overthought this, and as a result initially disagreed with him just to end by repeating what he said. Supply are the issued bonds. Demand are the investors who want to "purchase" those bonds. The reason the government CAN pay a lower rate when there are a lot of buyers (aka investors) is because there are a lot of buyers. The government isn't in a desperate position in that case. If there were less buyers, the government would have to raise rates to attract investors.

@tauriqabdullah6130 Год назад

when you explained why a treasury bond is risk free, I thought you were going to say that when the government has run out of money, all it needs to do is print more.

@rajatrana2020 Год назад

Printing more money is ofcourse an option but kind of a "last resort". You wouldn't want your govt to print more money and bring down the value of the currency (Zimbabwe's Crisis). Increasing Tax Rate on the other hand keeps the supply of currency constant in the country, it just shifts it from one side (citizens) to the other (government)

@m-p4256 Год назад

The government won't print money especially if they want inflation to keep down.

@NishantGogna 5 лет назад

What does it mean when the yield curve is flattening?

@jesseglaser2721 5 лет назад

Short-term rates are rising to the point that they are nearing the yield of long-term rates. This is a bad sign because banks are gaining less interest (banks receive interest on long-term loans and pay interest on short-term loans), AKA their net interest margin. A flattening, and eventually, inverted yield curve has predicted the last 7 recessions.

@nicholasblake1392 5 лет назад

The reason why short term yields rise above long term yields (which logically shouldnt happen in a good economy) is because bond investors bid up long term T-notes and bonds (10-30 years) in anticipation of the Fed (central banks) lowering interest rates and thereby raising prices, which current bond holders gain on. So it is anticipation of Fed action in response to a bad economy that the yield curve inverts.

@shreyakabadi9469 3 года назад

This videos was posted 12 years ago!!!

@Questfortruth86 15 лет назад

Or they could print and inflate the money supply.

@benrohr 2 года назад

Guess this is relevant yet again.

@okanaybar 8 лет назад

please note that you should annualize the rates shorter than 1 year and then plot the graphic accordingly.

@snois2 4 года назад

A positive slope is bullish and negative slope is bearish right?

@peters972 Год назад

8:38

@karenl3191 3 года назад

Good job. If you ever rerecord this though, use the word "maturity" instead of "duration". Duration has a special meaning in the world of bonds (it's a measure of how much the price of the bond changes when interest rates change).

@AZ-vw8gn 3 года назад

1:09 they can print money*

@lilgrey8363 3 года назад

we can’t just print more money because of inflation.

@uartim 5 лет назад

2008.... before the tsunami

@shortjohnsilver4605 5 лет назад

Guess what we're in for round 2 of, right about now

@Partizan-one 6 лет назад

Couldn't the fed pay back the bonds by printing money instead of raising taxes depending on the climate of the economy.

@josef6999 6 лет назад

james panos That causes Hyperinflation which ruins economies. Suggest you look up hyperinflation

@Partizan-one 6 лет назад

Josef , I understand how hyperinflation works. printing may be the only option the fed has, especially at the end of our massive debt cycle. thus there bond is guaranteed but the value of the dollar might be less by the time your loan is paid. so raising taxes is not the only way to pay back a loan. a bond is only secure if the dollar is on the gold standard.

@nicog6188 5 лет назад

Yeah ...print more money....said no educated person ever

@isaiahpaul3941 5 лет назад

They do! Look up Modern Monetary Theory.

@NathanRyanAllen 5 лет назад

@@josef6999 lol they do print money. The US prints money to pay for things all of the time.

@heigio123 2 года назад

This is wrong. Govt sells at certain fixed coupon or interest rate. The change in price of bonds, bills- demand and supply- determine the yield of that instrument.

@ghost-nq6px 2 года назад

are they really still risk free when the govt is so far in debt and manages to run out of funding money all the time?

@tsb7911 2 года назад

One very slight faux pas. Khan said, "The government can raise taxes if it runs out of money." Raising taxes must be passed by both Houses of Congress and signed into law by the President. Not an easy task. The fed simply prints more money. That's an easy task for them.

@musak.4068 Год назад

Both processes involve multiple individuals reaching an agreement...

@Cinthiel 5 лет назад

You keep saying "risk-free" but I don't believe anything is risk-free. What if the USD tanks? Doesn't that mean those bonds are worth significantly less or am I misunderstanding something?