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  • April 2013 The Yield Curve: An Economic Crystal Ball

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    Viv Sharma
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    The yield curve displays interest rates on the vertical axis and time until maturity on the horizontal axis. It can be constructed for any bond but is most commonly used to represent Treasury bonds, which range in maturity from 30 days to 30 years. A typical yield curve has a positive slope, with interest rates rising the longer it takes for a bond to reach maturity, as longer-term loans are seen as riskier than short-term loans due to uncertainty over future interest rate changes.

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    The yield curve displays interest rates on the vertical axis and time until maturity on the horizontal axis. It can be constructed for any bond but is most commonly used to represent Treasury bonds, which range in maturity from 30 days to 30 years. A typical yield curve has a positive slope, with interest rates rising the longer it takes for a bond to reach maturity, as longer-term loans are seen as riskier than short-term loans due to uncertainty over future interest rate changes.

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    April 2013 The Yield Curve: An Economic Crystal Ball

    Uploaded by

    Viv Sharma
    The yield curve displays interest rates on the vertical axis and time until maturity on the horizontal axis. It can be constructed for any bond but is most commonly used to represent Treasury bonds, which range in maturity from 30 days to 30 years. A typical yield curve has a positive slope, with interest rates rising the longer it takes for a bond to reach maturity, as longer-term loans are seen as riskier than short-term loans due to uncertainty over future interest rate changes.

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    yield curve can be constructed for any bond, the Treasury

    bond yield curve is the most important market indicator. Maturities on these
    bonds range from 30 days to 30 years. A yield curve can also be used to
    represent
    interest rates for any group of similar bondssuch as those of highly-rated
    banks (the LIBOR curve) or blue-chip corporations. A yield curve displays
    interest
    rates on the vertical axis and time until maturity on the horizontal axis.
    April 2013 The Yield Curve: An Economic Crystal Ball - 2
    The Capital Markets Initiative www.ThirdWay.org

    A typical yield curve has a positive slope with interest rates rising the longer
    the bond takes to reach maturity. Yield curves tend to have a positive slope
    because
    long-term loans are generally considered riskier than short-term loans. By
    risk, we dont necessarily mean the risk that the bond will default; instead
    its the
    risk that the investment wont do well compared with

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