11.   But a flat yield curve implies that the yields to maturity of all bonds should be identical.

12.   We would therefore not expect a yield curve to be constructed using both government and corporate bonds, since these would be from different risk classes.

13.   The most familiar yield curve is the yield to maturity yield curve.

14.   There are several problems with the YTM yield curve.

15.   For reasons such as these, bond analysts have devised a number of other types of yield curve.

16.   The coupon yield curve is a plot of the yield to maturity against term to maturity for a group of bonds with the same coupon.

17.   The par yield curve is a plot of the yield to maturity against term to maturity for bonds priced at par.

18.   The par yield curve is used to determine the required coupon on a new bond that is to be issued at par.

19.   The spot yield curve is a plot of spot yields against term to maturity.

20.   Thus the spot yield curve is the correct method for pricing or valuing any cash flow because it uses the appropriate discount factors.