How to Calculate a Bond Yield Curve
- 1). Find quotes on the bonds you wish to use for your yield curve. Use a quote list that includes both the price quotes and the yields to maturity based on those prices.
- 2). Prepare your yield curve graph on the graph paper, with interest rates from zero to 10 on the vertical axis. Then indicate the maturities along the horizontal axis, from zero to 2-year, 5-year, 7-year, 10-year, 20-year and 30-year.
- 3). Plot the yield to maturity of the current coupon bond in each maturity by placing it in the appropriate spot on your graph.
- 4). Draw a line connecting all the plotted yield points. This is your yield curve.
Source...