spot rate

Could you please explain spot rate. Does it belongs to only treasuries? Does it means zero coupon bonds?

You can have spot rates for just about any class of bonds. For example, spot rates worked out from the swap curve make lots of sense (and for a cookie a spot rate from the swap curve would also be called a ______). The zero-coupon bond curve and the spot curve are about the same. One thing to remember is that “the spot rate curve” doesn’t really exist except in cfa land. You need to make one from bond prices and how you back out optionality, liquidity, connect the dots, which bonds you choose to include, etc. all have something to do with the curve you work out. Obviously, if you and I both do something sensible for a similar class of bonds our curves will be pretty close.

JoeyDVivre, got it. Thanks a lot. I read lot of your posts.