At any particular time, there are a number of debt instruments or bonds with dierent maturities
and yields available for investment. e yield on bonds of the same maturity may dier because of the
dierent risk characteristics of the issuers. However, for a given issuer, the yields on bonds of the same
maturity should be the same, while the yield on bonds of dierent maturities may dier. e term
structure of interest rates, also called the yield curve, relates the yield on bonds of equivalent risk to their
maturities. Table 3.1 shows an example of term structure ...
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