The mathematical relationship between the interest rate and the time to maturity of the debt securities of a given borrower on a given date and denominated in a given currency. The percentage return generated by an investment, calculated as the cash flows received from the investment (for example, interest or dividend income and capital gains) divided by the purchase price of the investment. A theory used to explain the term structure of interest rates, which states that the shape of the yield curve depends on investors' expectations about future inflation rates, all else being equal. The chance that an investment will generate more than one possible return due to the potential for the investment's issuer failure to repay fully its interest or principal repayment obligations or satisfy the other terms in the investment agreement. The potential for an investment yield to vary due to changes in the market interest rate and the investor's opportunity cost. The characteristic of an asset whereby it can be sold at any time in a relatively short period of time with a minimum loss of value. Calculated as the difference between a higher selling price and a lower purchase price, this profit results from the appreciation in an asset's Value. This theory of the term structure of interest rates argues that borrowers and lenders have a preferred maturity for their activities, and the shape of an observed yield curve results from the unique interaction between the supply and demand for funds by these lenders and borrowers in the markets for short-and long-term markets. An implied interest rate that does not reflect an inflation risk premium. The graphical representation of the term structure of interest rates for a specified issuer on a given day and currency