Indian Express Explained 30th and 31st March 2020

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1)Explained: Bonds, yields, and inversions:- 

Bonds:- A bond is an instrument to borrow money. It is like an IOU.

A bond could be floated/issued by a country’s government or by a company to raise funds. Since government bonds (referred to as G-secs in India, Treasury in the US, and Gilts in the UK) come with the sovereign’s guarantee, they are considered one of the safest investments. As a result, they also give the lowest returns on investment (or yield).

Investments in corporate bonds tend to be riskier because the chances of failure (and, therefore, the chances of the company not repaying the loan) are higher.

What are bonds yields?:- 

Simply put, the yield of a bond is the effective rate of return that it earns. But the rate of return is not fixed — it changes with the price of the bond. But to understand that, one must first understand how bonds are structured. Every bond has a face value and a coupon payment. There is also the price of the bond, which may or may not be equal to the face value of the bond.

Suppose the face value of a 10-year G-sec is Rs 100, and its coupon payment is Rs 5. Buyers of this bond will give the government Rs 100 (the face value); in return, the government will pay them Rs 5 (the coupon payment) every year for the next 10 years, and will pay back their Rs 100 at the end of the tenure. In this case, the bond’s yield, or effective rate of interest, is 5%. The yield is the investor’s reward for parting with Rs 100 today, but for staying without it for 10 years.

Why and how do yields go up and down?

Imagine a situation in which there is just one bond, and two buyers (or people willing to lend to the government). In such a scenario, the selling price of the bond may go from Rs 100 to Rs 105 or Rs 110 because of competitive bidding by the two buyers. Importantly, even if the bond is sold at Rs 110, the coupon payment of Rs 5 will not change. Thus, as the price of the bond increases from Rs 100 to Rs 110, the yield falls to 4.5%.

Similarly, if the interest rate in the broader economy is different from the initial coupon payment promised by a bond, market forces quickly ensure that the yield aligns itself with the economy’s interest rate.

In that sense, G-sec yields are in close sync with the prevailing interest rate in an economy. With reference to the above example,

Example:- if the prevailing interest rate is 4% and the government announces a bond with a yield of 5% (that is, a face value of Rs 100 and a coupon of Rs 5) then a lot of people will rush to buy such a bond to earn a higher interest rate. This increased demand will start pushing up bond prices, even as the yields fall. This will carry on until the time the bond price reaches Rs 125 — at that point, a Rs-5 coupon payment would be equivalent to a yield of 4%, the same as in the rest of the economy.

2)What is NASA’s Parker Solar Probe:- On August 12, NASA’s Parker Solar Probe completed a year in service. It is part of NASA’s “Living With a Star” programme that explores different aspects of the Sun-Earth system. The probe seeks to gather information about the Sun’s atmosphere and NASA says that it “will revolutionise our understanding of the Sun”. It is also the closest a human-made object has ever gone to the Sun.

Central Theme of the Mission-The mission’s central aim is to trace how energy and heat move through the Sun’s corona and to study the source of the solar wind’s acceleration.

3)What Henley Passport Index tells us about mobility of an Indian passport:-

What is the Henley Passport Index?

Prepared by Henley and Partners, a London-based global citizenship and residence advisory firm, the Henley Passport Index claims to be the “original ranking of all the world’s passports”.

The index gathers data from the International Air Transport Association (IATA) that manages inter-airline cooperation globally.

The Henley Passport Index is updated in real time according to countries’ visa policy changes. It covers 227 destinations and 199 passports.

The score is the sum of the number of countries accessible by that passport holder without requiring pre-departure government approval for visa-types including a visitor’s permit, visa on arrival or an electronic travel authority (ETA).

4)What is Adratiklit boulahfa?

Scientists have described a new species of stegosaurus and dated it to 168 million years ago, which makes it the oldest known member of that group of dinosaurs ever known. Named Adratiklit boulahfa, it is also the first stegosaurus to be found in North Africa.

Its remains were discovered in the Middle Atlas mountains of Morocco, and the study describing it was led by Dr Susannah Maidment of the London’s Natural History Museum (NHM).

The scientists believe it is not only a new species but also belongs to a new genus. The name is derived from the words used by the Berber (an ethnic group indigenous to North Africa) for mountains (Adras), lizard (tiklit) and and the area where the specimen was found. (Boulahfa).

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