I am Julia Cains from Brisbane. This is my first mail to this group and I have recently started learning the R language.  I am trying to learn the smoothening of the yield curve. However, I came across the CRAN package â âYieldCurveâ meant for Modelling and estimation of the yield curve. The problem is I am not able to understand whether this package will help me to carry out smoothening of the curve.  The related pdf file consists of following R code.   YieldCurve-package Modelling and estimation of the yield curve (Page 2)  # __________________________________________________ data(FedYieldCurve) tau <- c(3, 6, 12, 60, 84, 120) mediumTerm <- c(12,60,84) NSParameters <- Nelson.Siegel( rate=FedYieldCurve[1:10,], maturity=tau, MidTau=mediumTerm ) y <- NSrates(NSParameters[5,1:3], NSParameters$lambda[5],tau) plot(tau,FedYieldCurve[5,],main="Fitting Nelson-Siegel yield curve", type="o") lines(tau,y, col=2) legend("topleft",legend=c("observed yield curve","fitted yield curve"), col=c(1,2),lty=1)  # __________________________________________________ The plot gives me two curves (1) Observed yield curve and (2) Fitted yield curve.   Unfortunately I am not able to interpret the result.  The input has 330 records (i.e. from January 1982 to June 2009) and each record has 6 yields given (for the period 3months, 6 months, 1 year, 5 years, 7 years and 10 years.)  Unfortunately I am not that good in Mathematics. Can someone help me understand whether this code is meant for smoothening of the yield curve. I shall be highly obliged.  Regards  Julia  ******************************************* Only a man of Worth sees Worth in other men ******************************************* [[alternative HTML version deleted]]
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