Can somebody please explain me the difference between yield curve and term structure of interest rate?



1 Answer 1


As far as I understand these terms are used almost interchangeably with the former term being more wide while the later applies more specifically to visualization of the term structure.

According to Mishkin and Eakins, Financial Markets and Institutions. 8ed, in chapter 5 pp137 on Term Structure of Interest Rates:

A plot of the yields on bonds with differing terms to maturity but the same risk, liquidity, and tax considerations is called a yield curve, and it describes the term structure of interest rates...

Also the whole chapter on term structure of interest rates focuses almost solely just on the yield curve.

However, as I understand it, the term structure of interest rates can be also applied also more widely, while yield curve specifically refers to the above mentioned plot. However, since the yield curve is almost always used to visualize the relationship the terms are colloquially often used as synonyms.

  • 2
    $\begingroup$ I’d agree that often used as synonyms. Few points. 1) Some people will refer to a particular slope (e.g., the 2/10-year slope) as a “yield curve” in the context of forecasting, which is terrible terminology, but too late to fix. 2) Term structure often refers to the entire mathematical relationship around a curve, including implied forwards, etc., while a “yield curve” is often only a plot/table of spot yields. $\endgroup$ Commented Oct 30, 2020 at 20:58
  • 1
    $\begingroup$ (The second point is essentially covered in your answer, but implied things like forwards or zero rates are the extra information to note.) $\endgroup$ Commented Oct 30, 2020 at 21:00
  • $\begingroup$ @BrianRomanchuk thanks for the addition, I also agree on the point 1 that the terminology here is often abused $\endgroup$
    – 1muflon1
    Commented Oct 30, 2020 at 21:05

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