Par Yield Curve

What is a 'Par Yield Curve'

A par yield curve is a graph of the yields on hypothetical Treasury securities with prices at par. On the par yield curve, the coupon rate will equal the yield-to-maturity of the security, which is why the Treasury bond will trade at par.

BREAKING DOWN 'Par Yield Curve'

Deriving a par yield curve is a step toward creating a theoretical spot rate yield curve, which is then used to more accurately price a coupon-paying bond. A method known as bootstrapping is used to derive the arbitrage-free forward interest rates.

RELATED TERMS
  1. At Par

    A term that refers to a bond, preferred stock or other debt obligation ...
  2. Par Value

    The face value of a bond. Par value for a share refers to the ...
  3. Par

    Short for "par value," par can refer to bonds, preferred stock, ...
  4. Below Par

    A term describing a bond whose price is below the face value ...
  5. Full Stock

    A stock with a par value of $100 per share. A full stock issue ...
  6. Face Value

    The nominal value or dollar value of a security stated by the ...
Related Articles
  1. Investing Basics

    What is Par Value?

    Par value is a term used for investments that means original value. It’s also called face value or nominal value.
  2. Professionals

    Price Terms

    FINRA Series 6 Exam Study Guide - Price Terms. Discusses the important terms that apply to securities markets and bond pricing.
  3. Professionals

    Bond Pricing

    Once issued, corporate bonds trade in the secondary market between investors similar to the way equity securities do. The price of bonds in the secondary market depends on all of the following: ...
  4. Professionals

    Bond Pricing

    Once issued, corporate bonds trade in the secondary market between investors similar to the way equity securities do. The price of bonds in the secondary market depends on all of the following: ...
  5. Professionals

    Yield Curves

    FINRA/NASAA Series 65: Section 8 Yield Curves. In this section normal, inverted and flat yield curves and yield spreads.
  6. Bonds & Fixed Income

    Advanced Bond Concepts: Term Structure of Interest Rates

    The term structure of interest rates, also known as the yield curve, is a very common bond valuation method. Constructed by graphing the yield to maturities and the respective maturity dates ...
  7. Investing

    Trade Bond ETFs Using Yield Curves

    Different types of yield curves provide important insights for trading bond-based securities.
  8. Professionals

    Yield Curve

    Yield Curve
  9. Fundamental Analysis

    Paid-Up Capital

    Paid-Up Capital is listed in the equity section of the balance sheet. It represents the amount of money shareholders have paid into the company by purchasing shares. It’s essentially two accounts, ...
  10. Professionals

    Yield Curves

    CFA Level 1 - Yield Curves. Learn how governments can influence short and long-term interest rates. Discusses the various shapes of yield curves and how they are formed.
RELATED FAQS
  1. Why would a stock have no par value?

    People often get confused when they read about the "par value" for a stock. One reason for this is that the term has slightly ... Read Answer >>
  2. What is the difference between par and no par value stock?

    Understand the difference between par and no par value stock and how this differentiation affects corporate liabilities and ... Read Answer >>
  3. What does tier 1 capital tell investors about a bank's operations?

    Learn about which financial instruments have par values and what this means about the market price of the most common of ... Read Answer >>
  4. Are corporations required to state the par value of their stock?

    Find out when companies are required to state the par value of stock and why it is beneficial to businesses and shareholders ... Read Answer >>
  5. What is the difference between par value and market value?

    Learn about the difference between the par value and market value of financial securities, including the role they play in ... Read Answer >>
  6. What types of fees apply to checking accounts?

    Learn about the difference between a bond's coupon rate and its yield to maturity, and how the par value, coupon rate and ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center