What Is Yield Curve? Meaning & Example
Definition
The yield curve plots interest rates on bonds of the same credit quality across different maturities. Its shape offers clues about growth and rate expectations.
Related terms
An inverted yield curve occurs when short-term bonds yield more than long-term bonds. Historically it has often appeared before recessions, though not perfectly.
BondA bond is a loan you make to a government or company in exchange for regular interest payments and the return of principal at maturity. Bond prices tend to fall when interest rates rise.
Interest RateAn interest rate is the cost of borrowing money or the reward for saving it, shown as a yearly percentage. Central bank rate decisions influence rates throughout the economy.
What is Yield Curve?
The yield curve plots interest rates on bonds of the same credit quality across different maturities. Its shape offers clues about growth and rate expectations.
Can you give an example of Yield Curve?
Normally, a 10-year bond yields more than a 2-year bond, creating an upward-sloping curve.