Question

Explain what is meant by the yield curve. Show your drawing of the yield curve that is prevailing now in 2019.

Answer 1

Yield curve describes the relationship between the interest and the time maturity duration of a given financial instrument. In general the curve shows different yields or returns or interest rates across for a given contracts at a given debt segments.

If we consider the present economic and market conditions in USA, the interest rates definitely are going to be hike. The economic conditions becoming good, the investors are optimistic about the market and economy, employing their funds in US market only by withdrawing from other markets.

Hence the curve is going be having a slope of increasing towards its right from the origin point. If the time is increasing, the slope also going to be increase.