Yield curve

A yield curve is a plot of the yields of all bonds of the same quality, from the lowest to highest maturity. A typical yield curve is based on the yield-maturity relationship of default-free US Treasury securities. There are three basic configurations for yield curve. A positive curve shows that short-term interest rates are lower than long-term interest rates. A flat curve results when short-term and long-term interest rates are about the same. A negative yield curve is seen when short-term interest rates are higher than long-term interest rates.

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