The yield curve shows
A)the yields on stocks of different maturities.
B)the interest rates on bonds of different maturities.
C)the yields on stocks with differing default risk.
D)the yields on bonds with differing default risk.

Question

Quizplus · Accepted Answer

The yield curve shows the interest rates on bonds of different maturities. It is a graphical representation of the relationship between bond yields and bond maturities. Generally, the yield curve slopes upwards because longer-term bonds usually have a higher yield than shorter-term bonds to compensate investors for the additional risk and inflation expectations over a longer period.

The Yield Curve Shows