Any theory of the term structure of interest rates needs to explain each of the following, except:
A) The upward slope of the yield curve
B) Why the yields of different maturities tend to move together
C) Why short-term yields are usually higher than long-term yields
D) Why long-term yields are usually higher than short-term yields

Question

Quizplus · Accepted Answer

Theories of the term structure of interest rates generally explain why long-term yields are usually higher than short-term yields (option D), not the reverse (option C).

Any Theory of the Term Structure of Interest Rates Needs