The Basics

What is a yield curve?

When you compare the yields of different bonds over different periods of time, you use a graph called a yield curve. On the horizontal axis is the time to maturity. On the vertical axis is the yield of the bonds you are comparing. The yield curve graphically demonstrates that in a typical fashion, as bonds rise in maturity, so do their expected yields. Generally, when you compare bonds that are nearer in terms, such as short-term versus intermediate-term bonds, the expected yields will be higher for the intermediateterm bonds.


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