Flat Yield Curve
What it is:
Flat yield curve refers to a yield curve which reflects little or no disparity between short-term and long-term interest rates.
How it works (Example):
A flat yield curve is essentially a horizontal line representing similar yields for short-term and long-term debt securities in the same credit category, as shown below:
Under these circumstances, for instance, a bond with a 30-year term would have virtually the same yield as a similarly-rated bond with only a five-year term.
