What is yield curve in SAP IS-B-RA - Risk Analysis?

SAP Term: yield curve

• Component: IS-B-RA

• Component Name: Risk Analysis

• Description: A list of reference rates for different maturities, and for a particular currency. The reference interest rate specifies the interest that is calculated for an amount that is invested on the validity date of the interest rate until its maturity. The validity date, yield curve type, and the currency together form the yield curve.

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• Key Concepts: 
  Yield curve is a graphical representation of the relationship between the yield of a security and its maturity date. It is used to measure the risk associated with a particular security. In SAP IS-B-RA Risk Analysis, yield curves are used to calculate the expected return on investments and to assess the risk associated with different investments. 
  
  How to use it: 
  In SAP IS-B-RA Risk Analysis, yield curves are used to calculate the expected return on investments. To do this, the user must first select a yield curve from the available options. The user can then enter the maturity date and coupon rate of the security and the system will calculate the expected return on investment. 
  
  Tips & Tricks: 
  When selecting a yield curve, it is important to consider the current market conditions as well as the risk associated with the security. It is also important to consider any changes in interest rates that may affect the expected return on investment. 
  
  Related Information: 
  Yield curves are also used in other areas of finance such as portfolio management and asset allocation. They can also be used to measure the risk associated with different investments and to compare different investments.