The term structure of interest rates is typically defined as a yield curve displaying the relationship between spot rates of zero-coupon securities and their term to maturity. This concept is derived from the ‘yield curve’ which describes the relationship between interest rate and tenor/time to maturity across various tenors; 2 to 20 years. Shape of […]

The term structure of interest rates is typically defined as a yield curve displaying the relationship between spot rates of zero-coupon securities and their term to maturity. This concept is derived from the ‘yield curve’ which describes the relationship between interest rate and tenor/time to maturity across various tenors; 2 to 20 years. Shape of the yield curve is very important for traders and analysts. For example a flatter yield curve indicates steady interest rates, of a long and upward facing yield curve indicates that the longer the term, higher are the interest rates.

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