Editing Spot contract (section)

=== Bonds and swaps ===
A spot rate is the [[interest rate]] for a specific maturity, which is to be used for [[discounted cash flow|discounting the cash flows]] which occur at that date. 
An alternate statement of this: the rate of effective annual growth that equates the [[present value]] with the [[future value]].<ref>[https://www.tcd.ie/Economics/staff/mcgoldep/ECON%203050/EC3050/The%20Term%20Structure%20of%20Interest%20Rates%20lecture%20notes.pdf The Term Structure of Interest Rates], [[Trinity College Dublin]]</ref>
The terminology is consistent with the above, in that the spot rate is related to the [[forward rate]] analogously.

A spot rate ''curve'' displays these rates over various maturities. 
Each security class will have its own curve (with the resultant [[Credit spread (bond)|credit spread]] – e.g. swaps vs government bonds – a function of increased [[credit risk]]). 
A ''zero rate'' curve or zero curve is the term structure of the [[yield to maturity|yields-to-maturity]] of [[Zero-coupon bond]]s and maturities. <ref>[https://finpricing.com/lib/IrCurve.html Spot, Zero, Forward Curves], finpricing.com</ref>

Note that a spot rate curve is ''not'' a curve of  [[yield to maturity|bond ytm]] or [[swap rate]]s<ref>David Harper (2015). [https://www.bionicturtle.com/spot-rates/ spot-rates], ''bionicturtle.com''</ref> – which in fact are curves of currently trading ''prices'' of securities with various maturities (these would be: [[yield curve]], swap curve, cash curve or coupon curve).
Spot rates cannot be directly observed, prices can: 
spot rates are thus estimated from these prices via the [[bootstrapping (finance)|bootstrapping method]], and the result is the spot rate curve for the securities in question.