historically three types of shapes have

Question

• Historically, three types of shapes have been observed for the yield curve.

• The relative change in the yield for each treasury maturity is known as a shift in the yield curve.

• Litterman and Scheinkman discussed three factors which explained historical returns. These factors are - changes in the level of rates, changes in the slope of the yield curve, and changes in the curvature of the yield curve.

• On-the-run treasury issues are the most recently auctioned issues of a given maturity. They include different T-Bills, T-Notes and T-Bonds.

• The two important theories related to the shapes of the yield curve are - expectations theory and market segmentation theory.