Normal Yield Curve

What Does It Mean?
What Does Normal Yield Curve Mean?
A yield curve in which short-term debt instruments have a lower yield than long-term debt instruments of the same credit quality. This gives the yield curve an upward slope. This is the most often seen yield curve shape.

Sometimes referred to as "positive yield curve".
Investopedia Says
Investopedia explains Normal Yield Curve
This yield curve is considered "normal" because the market usually expects more compensation for greater risk. Longer-term bonds are exposed to more risks such as changes in interest rates and an increased exposure to potential defaults. Also, investing money for a long period of time means an investor is unable to use the money in other ways, so the investor is compensated for this through the time value of money component of the yield.
Related Links
Rate this Term: Your Rating:    Overall Rating: Vote Now!
Sponsored Links
MARKETPLACE
The Investopedia Guide to Wall Speak
TRADING CENTER
CURRENT HIGH YIELD SAVINGS RATES
Type
Overnight avgs
Rate data provided by
Bankrate.com
add investopedia foot
www.investopedia.com