What is a yield curve? What factors affect the shape of a yield curve?
Yield curve is a plot between the interest rates and different
maturities of bonds.It is an indicator about future changes in the
economy and bond prices. There are 3 types of yield curves.
1.Normal Yield Curve 2. Flat Yield Curve 3. Inverted Yield
Curve
Factors affecting shape of a yield curve:
Maturity of the bonds, the interest rate expectation, liquidity
premium , and the demand and supply of the bonds affect the shape
of the yield curve, the ecxonomic condition of the country also
plays a role in it.
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