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Explaining the Term Structure of Interest Rates and its Three Facts

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What is the term structure of interest rates, and its three facts?

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This solutions explains the term structure of interest rates and its three key facts.

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"To have a successful trading strategy, the investor needs some expertise in determining the future direction of interest rates. It is important to understand the factors that determine:
• the general level of interest rates at any particular time
• the level of interest rates at different terms to maturity.
There is not just one interest rate in the economy, but many rates. These rates vary, depending on the term to maturity of various debt instruments. This is referred to as the term structure of interest rates. A graph depicting this term structure ...

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