## positive yield curve - Investment & Finance Definition

An upward sloping yield curve that is characterized by interest rates that are higher on long-term debt than on short-term debt. This is the normal situation, because investors have to be compensated more for taking on the greater risk of tying their funds up for a longer period of time. If short-term interest rates are higher than longer-term interest rates, the graph is called a negative yield curve. A yield curve is a visual representation of interest rates on a graph shown for various points in time. For instance, the Treasury yield curve begins with 3-month bills and has points representing 6-month bills, 52-week bills, 2-, 3-, 5- 10-year notes, and the 30-year bond.