The term structure of interest rates is a graphic representation of how interest rates vary with maturity; it shows the relationship between the yield from a financial instrument and its maturity. Yields across different outstanding maturities can be plotted to create a yield curve - and the term structure of interest rates is better known as the yield curve. Yield curves come in different shapes but they always refer to instruments of a homogeneous (the same) nature. As interest rates change - or as expectations of future interest rates change - investors will typically switch between maturities to try to achieve capital gains (or at least to avoid capital losses). SSuch repositioning changes the shape of the yield curve because of the inverse relationship between price and yield.

A chart plotting the spot yields of a family of zero-coupon bonds having similar properties (e.g., credit risk, marketability, etc.) against the maturity of the bonds. Time Deposit (TD): A bank deposit, usually interest-bearing, with a fixed maturity.

The relationship between securities' yields and maturities. A rising term structure, i.e. where yields on short-term securities are lower than yields on long-term securities, is considered normal. A falling term structure is described as inverse.

The relationship between the yields on otherwise comparable securities with different maturities, often depicted as a yield curve.

(Structure à terme des taux d'intérêt) The sum of all inter-relationships existing between the yield and maturity of bonds of a similar nature that differ only in terms of maturity. The rate structure, as it is often referred to, is usually represented by a curve. See: Yield Curve

A yield curve displaying the relationship between spot rates of zero-coupon securities and their term to maturity.