Unformatted text preview: ts and liabilities (matching principle)
Dr. David P. Echevarria
Dr. All Rights Reserved 4 TERM STRUCTURE OF INTEREST
A. Comprehensive Explanation for Term
Structure and Shape of the Yield Curve
1. The yield curve has much to do with investor
expectations about the economy.
2. Lenders prefer less risk and more liquidity.
3. Borrowers prefer longer terms.
4. Implications of flat and inverted yield curves Dr. David P. Echevarria
Dr. All Rights Reserved 5 Inverted Yield Curve
Nov 14, 2000 Dr. David P. Echevarria
Dr. All Rights Reserved 6 Yield Curve Aug 29, 2011 Dr. David P. Echevarria
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