When referring to a "downward sloping" yield curve:
A) as maturities shorten, interest rates decline
B) as maturities shorten, interest rates rise
C) as maturities lengthen, interest rates remain the same
D) as maturities lengthen, interest rates rise

Question

Quizplus · Accepted Answer

A downward sloping (or inverted) yield curve indicates that shorter-term bonds have higher yields than longer-term bonds. This implies that as maturities shorten, interest rates rise.

When Referring to a "Downward Sloping" Yield Curve