Building the (zero-coupon) yield curve serves as a foundational step in many financial modeling endeavors. Once the curve is built, users can use the Curve Inspector feature to visualize and inspect the curve.
How to best build a yield curve from observed market data is a never ending debate among specialists. It is typically a mixture of theoretical considerations, data analysis and cleanup, pragmatic arguments (about stability or smoothness of the curve for instance), implicit assumptions about market structures (that imply different choices of interpolation and extrapolation) and, last but not least, targeted use of the built yield curve.
Thanks to the curve inspector tool, users can inspect yield curves based on market data.
The primary function of the curve inspector is to provide a graphical representation of the yield curve, allowing users to visualize the relationship between interest rates and their corresponding maturities. Curve inspector is thus a great tool to analyze and visualize yield curves, including curve spreads, shifts, and shapes. Users may be able to plot multiple curves, identify trends or anomalies.
The curve inspector offers functionalities such as:
- Data Analysis: It allows users to analyze the data points that make up the curve, including the yields or interest rates at various points along the maturity spectrum.
- Scenario Analysis: users are able to input different assumptions into the curve inspector to see how they affect the shape and characteristics of the yield curve.
💡For more details about the Yield Curve building in LexiFi, you can refer to the Monthly Focus Yield Curve building in LexiFi Apropos on the website.