diskonttauskäyrän

The term "diskonttauskäyrä" translates from Finnish to English as "discount curve". A discount curve is a graphical representation of the interest rates or yields for debt instruments of various maturities. It is a fundamental tool in finance, particularly in the valuation of fixed-income securities and the measurement of interest rate risk.

A typical discount curve plots the yield to maturity on the vertical axis against the time to maturity on the horizontal axis. It can be constructed using the prices of zero-coupon bonds, or it can be derived from the prices of coupon-paying bonds through a process called bootstrapping. The shape of the discount curve provides insights into market expectations about future interest rates. A normal or upward-sloping curve indicates that longer-term interest rates are expected to be higher than shorter-term rates. Conversely, an inverted or downward-sloping curve suggests that longer-term rates are expected to be lower than shorter-term rates. A flat curve implies that interest rates are expected to remain relatively stable across all maturities.

Discount curves are used extensively in financial modeling for tasks such as pricing bonds, calculating the present value of future cash flows, and determining the duration and convexity of a portfolio. They are also crucial for risk management, enabling institutions to assess their exposure to changes in interest rates. Variations in the discount curve can reflect changes in monetary policy, inflation expectations, and overall economic conditions.