Yield Curve

The yield curve represents the connection between the market-traded bonds' maturities and their yield to maturity. The yield curve comprises three segments: the center segment, the long end, and the short end. Implications about the status of the bond market today may be made based on this curve's form. The curve typically rises with longer maturities since the investor gets better returns by investing his money longer. Depending on where his portfolio falls on the yield curve, the fund manager handles the interest-rate risk of the investment.