What is a yield curve? What do you need to draw this curve? Use a real-world example to support your response.

What is a yield curve? What do you need to draw this curve? Use a real-world example to support your response.

 

 

answer:

Thanks for your question,

Yield curve is a graph that is draw to show the relation between yield and maturity of a bond instrument.

The X axis of the graph shows the maturity while Y axis represents the Yield.

The most frequently reported yield curve compares the three-month, two-year, and five-year and 30-year US Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates, and it is also used to predict changes in economic output and growth.

The yield curve shows the various yields that are currently being offered on bonds of different maturity. It enables investors at a quick glance to compare the yields offered by short-term, medium-term and long-term bonds.

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