a potential default (or rising rates of inflation), so they demand higher interest rates on long-term loans than they demand on shorter-term loans to compensate for the increased risk.
Occasionally, when lenders are seeking long-term debt contracts more aggressively than short-term debt contracts, the yield curve "inverts", with interest rates (yields) being lower for the longer periods of repayment so that lenders can attract long-term borrowing.
The Fitted Bond Discount Curve class acts as a generic wrapper, while its inner class Fitting Method provides the implementation details.
Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called "the yield curve".
The interest rate is the "price" paid to convince them to lend.
Their maturities mark the boundaries of the interpolated segments.
Each segment is determined sequentially starting from the earliest period to the latest and is chosen so that the instrument whose maturity marks the end of such segment is correctly repriced on the curve.
This is same description as with the more common interest rate swap (IRS).