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Yield curve

• A graph of the term structure of interest rates that depicts the relationship between the yield to maturity of a security (y-axis) and the time to maturity (x-axis); it shows the pattern of interest rates on securities of equal quality and different maturity.

• A graph showing, for securities that all expose the investor to the same credit risk, the relationship at a given point in time between yield and current maturity. Yield curves are typically drawn using yields on governments of various maturities. It is also called the termstructure of interest rates. Typically the yield curve rises with maturity.

• A graphic representation of a curve that shows Interest Rates at a specific point for all securities having equal risk but different maturity dates. Usually, government securities are used to construct such curves. See also: Flat Yield Curve; Inverted Yield Curve; Normal Yield Curve.

• The graphical depiction of the relationship between the yield on bonds of the same credit quality but different maturities. Related: Term structure of interest rates. Harvey (1991) finds that the inversions of the yield curve (short-term rates greater than long term rates) have preceded the last five U.S. recessions. The yield curve can accurately forecast the turning points of the business cycle.

• Refers to the graghical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest term rates and extends towards longer maturities. It reflects the market's views about implied inflation/deflation, liquidity, economic and financial activity and other market forces.

 
 

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 Embedded terms in definition
 Business cycle
Credit risk
Credit
Current maturity
Flat yield curve
Flat
Government securities
Governments
Interest rate
Interest
Inverted yield curve
Investor
Liquidity
Long term
Long
Market
Maturity date
Maturity
Normal yield curve
Point
Risk
Securities
Security
Term structure of interest rates
Term structure
Time to maturity
Time
U
Yield to maturity
Yield
 
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