Yield curve
Principles of Finance glossary · Valuation of Bonds & Stocks
Definition
Plot of yield against maturity; see also term structure.
Yield curve in plain English
A bond is basically an IOU — you lend money and get paid back later with interest, and the "yield" is the annual return you earn. The yield curve is just a graph showing that yield for loans of different lengths, from short (a few months) to long (many years). Normally longer loans pay a bit more because your money is tied up and more can go wrong over time, so the curve usually slopes upward. Watching its shape is a favorite economic tea-leaf: when short-term yields rise above long-term ones (an "inverted" curve), it has often signaled a recession ahead.
Learn these first
Practice Yield curve
Related Principles of Finance terms
Principles of Finance practice questions · Principles of Finance flashcards · Principles of Finance study guide