You can create a yield curve in Microsoft Excel if you give time for the repayment of bonds and their yield to maturity. The yield curve shows the term structure of interest rates for bonds and term structures can be normal, inverted or flat.
The shape of the yield Curve means, where future interest rates are headed. The X-axis of the graph the yield Curve persisted over the time to maturity, while yield to maturity is located on the Y-axis.
Suppose you want to build a yield curve in two-, five-, 10-, 20 – and 30-year U.S. Treasury bonds (T-bonds). Corresponding yield to maturity of U.S. T-bonds 2.5%, 2.9%, 3.3%, 3.60% and 3.9%.
Now, Follow These Five Steps:
In the result, the yield curve for these us bonds are considered normal, because it is concave downward (increasing), and the rates increase as time to maturity, then.