 The yield curve reflecting expectations on future short rates offers a powerful tool for analyzing fixed income securities. Also, these expectations can be used as a benchmark by anyone while analyzing for his own purposes. So, in this way, useful information can be developed while analyzing the term structure interest rates. But there are certain issues with the yield curve like the forecast of future rates are clouded by some other factors like liquidity premium and different investment opportunities implications. Upward sloping curve we have an upward sloping curve can indicate interest rates are expected to rise or investors require large liquidity premium on long term bonds. Then a new forward rate higher than the average of the past observed interest rates. There are two reasons that the forward rates could be high. The first is that either the investors expect high interest rates or they require a large premium for holding long term bonds. Then two limitations to the expected future spot rates assuming constant liquidity premium. The first limitation is that it is impossible to obtain a reliable estimate of liquidity premium due to the noisy data. And second is that the assumption of constant liquidity premium is not justified in any case. However, the yield curve is a good predictor of business cycle in the sense that the long term rates tend to rise in the anticipation of economic expansion. And the inverted yield curve may also indicate that interest rates are expected to fall and it signal a recession in the economy. Fall in interest rates due to real rates and the inflation premium whereas these two particular factors are vital to consider as economic environments associated with these two may vary substantially. The high real rates may indicate an expanded economy, high government budget deficit and tightened monetary policy whereas the high inflation rate can rise out of a rapidly expanded economy. The high real inflation rates may have very different implications for the investment and analysis of yield curve shows that the rates will fall and that needs to analyze the macroeconomic factors that might cause such type of declines as we have seen in our recent discussion.