Riding the Yield Curve

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DEFINITION of 'Riding the Yield Curve'

A trading strategy that is based upon the yield curve and used for interest rate futures. Investors hope to achieve capital gains by employing this strategy.

INVESTOPEDIA EXPLAINS 'Riding the Yield Curve'

Traders riding the yield curve buy long term bonds with the hopes of making a profit as the yields fall with the declining maturity of the bonds.

RELATED TERMS
  1. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  3. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  4. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
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    The amount of time an investor must wait until he or she can ...
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