An inverted yield curve indicates that:
A)the short-term yields are higher than the long-term yields
B)the short-term yields are lower than the long-term yield
C)the yield to maturity increases with maturity
D)the yield to maturity decreases with maturity
E)both a and d

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when short-term yields are higher than long-term yields, which is described in option A. This situation also means that the yield to maturity decreases with maturity, as stated in option D. Therefore, both A and D are correct, making E the correct choice.

An Inverted Yield Curve Indicates That