Yield Curves and the Term Structure of Interest Rates

In this section

• Understanding the Yield Curve
  Review what the yield curve shows and why its slope and shape matter in bond analysis.
• Theories of Yield Curve Shape
  Compare the main theories used to explain why yield curves slope upward, flatten, or invert.
  • Expectations Theory
    Understand how expectations theory links long-term yields to expected future short-term interest rates.
  • Liquidity Preference Theory
    Review liquidity preference theory and why investors may demand higher yields for longer maturities.
  • Market Segmentation Theory
    Learn how market segmentation theory explains yield differences across maturity segments with distinct demand patterns.
• Constructing a Yield Curve
  See how analysts build yield curves from observed bond yields and maturity-specific pricing data.