Normal Yield Curve

Normal Yield Curve

A yield curve that trends upward, indicating that the interest rates for long-term debt securities are higher than short-term debt securities. This is the regular way a yield curve trends because investors demand a higher return for the higher risk of tying up their capital in securities with longer maturities. It is less commonly called a positive yield curve. See also: Negative Yield Curve, Flat Yield Curve.
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Line A represents a normal yield curve where long-term rates are higher than short-term rates.
They can then invest a core portion of their portfolio in longer-term securities, such as a 2-year Treasury note, to take advantage of higher yields in a normal yield curve environment.
On the positive side, however, as the folly of the competitors' thinking became apparent in the fourth quarter, Clifton Savings witnessed a return to a more normal yield curve.