Debt finance may be issued at different point in time and for different duration by the same company. Interest rate payable on different debt finance depends on yield curve at that time and duration of debt finance.
If yield curve is in upward direction, then interest rate on long-term debt finance will be higher interest rate on short-term debt. If yield curve is in downward direction then interest rate on short-term debt will higher than interest rate on long-term debt finance.
Yield curve can be said as flat, if difference between short-term interest rates and long-term interest rates are insignificant.
Yield curve is used to calculate suitable rate of interest when issuing loan.
Yield curve can be as benchmark for evaluating debt finance offered to the business.
Yield curve information can be easily obtained from financial journals and internet.
