Lessons

- CFA Level 2: Fixed Income Part 1 – Introduction
- Principles of Credit Analysis
- High Yield Corporate Debt (aka Junk bonds)
- Analyzing Credit of Asset Backed Securities
- Analyzing Credit of Municipal Bonds
- Sovereign Debt
- Three Shapes of the Yield Curve
- Parallel and Non-parallel Shifts in Yield Curve
- Factors Driving Treasury Investment Returns and Bond Price Risk
- Yield Curve Construction with Treasuries
- LIBOR Swap Rate Curve
- Theories of the Term Structure of Interest Rates
- Key Rate Duration
- How to Calculate Interest Rate Volatility?
- Benchmark Yield Spreads
- Valuing an Option Embedded Bond using Binomial Interest Rate Tree
- How to Price Convertible Bonds?

# Parallel and Non-parallel Shifts in Yield Curve

## Parallel Shift

Rates across the maturity spectrum change by a constant amount and the slope of the yield curve remains consistent.

## Non-Parallel Shifts

**Twist:**The slope of the yield curve becomes flatter (the spread between short and long term yields narrows) or steeper (the spread between short and long term yields widens).

**Butterfly:**Change to the curvature of the yield curve.`**Positive butterfly:** The yield curve goes loses some of its "hump" and becomes straighter. **Negative butterfly:** The yield curve takes on more of a hump and ceases to look similar to a straight line.`