CFA CFA Level 2 Yield Curve = Forward Curve?

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Yield Curve = Forward Curve?

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      Is the Yield Curve of a bond equal to the Forward Curve of the same bond?

      As in, can the term ‘Yield Curve of a Bond’ be used interchangeably with ‘Forward Curve of a Bond’?

    • Avatar of mokeefemokeefe
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        No, the yield curve of a bond and the forward curve of a bond are not interchangeable terms. While they are related, they represent different concepts.

        Yield Curve:

        Represents the relationship between the yield to maturity and the time to maturity of bonds with the same credit quality.
        It’s a snapshot of the market’s expectations of future interest rates at a specific point in time.

        Forward Curve:
        Implies expected future interest rates based on the current yield curve.
        It’s derived from the yield curve using arbitrage-free pricing models.
        Represents the market’s expectations of future short-term interest rates.

        P/s: super mario 64

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