The slope of a yield curve is commonly measured in terms of ________, which is the difference between long-term and short-term yields.

Question

Quizplus · Accepted Answer

The slope of the yield curve is commonly measured by the difference between long-term and short-term yields, which is commonly referred to as the maturity spread. Therefore, choice (B) is the best answer. Choice (A) is incorrect as the yield curve spread is not a commonly used term. Choice (C) is incorrect as the default spread is a measure of the difference between the yields on risk-free securities and the yields on securities with some credit risk. Choice (D) is incorrect as the interest rate spread is a broad term that can refer to the difference between any two interest rates, not just short- and long-term yields.

The Slope of a Yield Curve Is Commonly Measured in Terms