credit and inflation curves

Smiling · Post by **Smiling** » Sun Nov 11, 2007 9:46 am

Hi,

I have already mastered IR yield curves and very keen to get familiar with other types - credit and inflation.

For me, one-currency IR yield curve is a term structure of rates, and it is used for calculation of implied forward rates and for discounting purposes.

Could you please explain me in similar terms - what are the functions of credit and inflation curves?

Thank you.

-

Smiling

nsande · Post by **nsande** » Mon Nov 12, 2007 1:07 pm

"I have already mastered IR yield curves"

I wish I could say I've done that.

Evil Grin

margarita · Post by **margarita** » Mon Nov 12, 2007 7:15 pm

Smiling,

You will find plenty of stuff to answer your question if you do a little search on the internet - remember that before you post questions on the phorum, you need to master its rules too. In any case, start by thinking about credit ratings, for example, and you will get to the bottom of the raison d'etre of credit curves....

good luck

margarita

Smiling · Post by **Smiling** » Thu Nov 15, 2007 6:07 am

Margarita, I see you point.

I had actually searched the net before I posted my question here.

And yes, I know about credit ratings, CDSs and that it is possible to create a credit curve from these instruments. The same for a inflation curve.

The problem is I don't have a big picture - and this is what I was looking for - smth like

"the inlfation curve could give your inflation adjusted discount factors for particular currency for particular country".

So, I am asking the same question again - if someone have a 5 minutes or so to explain me in simple terms what credit and inflation curve is and how to use it - please do me a favor - post your explanations here - I believe it would be usefull not only for me but for also for other beginners around here.

Thank you.

Cheng · Post by **Cheng** » Thu Nov 15, 2007 12:19 pm

[i]The problem is I don't have a big picture - and this is what I was looking for - smth like

"the inlfation curve could give your inflation adjusted discount factors for particular currency for particular country".[/i]

In this case: "The credit curve of some instrument can be used to calculate risky discount factors for that instrument." (given that you have a "risk-free" curve lying around somewhere).

ynot · Post by **ynot** » Mon Nov 19, 2007 4:06 pm

"The problem is I don't have a big picture"

Have you tried Google Image search?

Sorry, not funny and not fair.

No, funny actually.

Oh well....