Yield curve Shapes

CFA Level II
#1

Yo,

Can someone please explain the yield curve shape in relation to curve,level,steepness.

If the yield curve is normal and upward sloping,

why does an increase in the level upwards result in lower returns? Is this because bond prices are now lower?

If the yield curve steepens why are short term bonds going to produce higher returns? If it steepens then doesnt rates rise sharper lowering the bond price sharper therefore lower returns?

Thanks

#2

Check if this helps.

http://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91350556

I have another query: Is “level” synonymous with “parallel shift” when identifying level, steepness and curve?

Identifying curve is easy (changes in the end points or the middle) and steepness is an increasing yield as maturity increases. What are the attributes of a level change?