Flat Yield Curve Definition
Flat Yield Curve is a yield
curve in which there is little difference between short-term and long-term
rates for bonds of the same credit rating. The yield curve itself is the
relation between the interest rate and the time to maturity of the bond. The
curve is flat when all maturities have similar yields. In this case there is
little benefit in buying longer-term bonds, the investors are not compensated
for the risk of holding longer-term securities. A flat curve sends signals of
uncertainty in the economy.