Browse Fixed Income Securities Analysis

Theories of Yield Curve Shape

Compare the main theories used to explain why yield curves slope upward, flatten, or invert.

In this section

  • 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.
Revised on Thursday, April 23, 2026
Yield Curve Basics
Yield Curve Construction