Yield Curves

Abstract

Ordering the current spot yields to maturities for any group of bonds. By maturity we get a so-called yield curve. This curve is often represented as a graph with time to maturity on the horizontal axis and yields on the vertical axis. The group is usually defined as bonds by the same issuer and/or the same credit rating. Thus, we speak of yield curves for government bonds, for mortgage bonds or for corporate bonds of the same credit rating. The word bond here is used in the academic sense which means bills, notes and bonds. Interest rates in international or domestic time deposit markets too can be ordered by maturity and credit class. Thus, we get London inter-bank offered rate (LIBOR) or XIBOR yield curves or yield curves for domestic deposits in any currency. There are many different yield curves.