Abstract
To understand the principal of the Yield curve we have first to define his terms and how it works. "Yield" is comparative as the interest rates: a percentage, during a defined period, of the profitability from a financial product for the person, who is lending it to another, schematically. Curve, in his side, is a graphical representation.
The "Yield curve" is in fact the graphical representation of the relation between these interest rates and the maturity of the financial product: the time needed to go to the terms of him. The operation of the yield curve is related to the time of maturity, first of all. It shows the evolution of the different yields on bonds across the time and permits to compare the different stage of maturity on bonds: if they are more profitable on short, medium or long term.
It is a huge tool for the investors, to know what is the most interesting placement related to their capacity from investment: how are they able to lend and have they the capacity to wait a long time before obtain revenue or not. It will permit to compare then the different yield curves of bonds and to know, which is the most profitable for them.
