The term structure of interest rates
A) represents the relationship among the interest rates on bonds that are otherwise similar but that have different maturities.
B) reflects differing tax treatment received by different instruments.
C) always results in an upward-sloping yield curve.
D) usually results in a downward-sloping yield curve.

Question

Quizplus · Accepted Answer

The term structure of interest rates represents the relationship among the interest rates on bonds that are otherwise similar but that have different maturities. It reflects the yield curve, which may be either upward-sloping, downward-sloping, or flat. The structure of interest rates is affected by various factors, including inflation, economic growth, and investor expectations.

The Term Structure of Interest Rates