A yield curve constructed from a sequence of yields-to-maturity on zero-coupon bonds is the:
A) par curve.
B) spot curve.
C) forward curve.

Question

Quizplus · Accepted Answer

A spot curve is constructed from yields-to-maturity on zero-coupon bonds. The spot curve represents the current interest rates for borrowing money for a certain period of time. A forward curve is constructed from the difference in yields between different maturities, while a par curve represents the relationship between bond yields and their duration. Therefore, the best choice is B) spot curve.

A Yield Curve Constructed from a Sequence of Yields-To-Maturity on Zero-Coupon