The document discusses the term structure of interest rates, which refers to how interest rates vary with the maturity or term of a bond. Specifically: 1) It examines why practically homogeneous bonds of different maturities have different interest rates, which is significant for both borrowers and lenders when deciding whether to invest in short-term vs long-term bonds. 2) It defines the yield curve as a graphical depiction of the relationship between yield and maturity for bonds of the same credit quality. The term structure of interest rates shows this relationship for zero-coupon bonds. 3) To construct the term structure, theoretical spot rates must be derived from yields on actual Treasury securities, since zero-coupon Treasuries only

1. Term Structure of Interest Rates Maroof Hussain Sabri