Assume that these current yields exist: long-term government securities yield 9 percent, five-year Treasury securities yield 8.5 percent, and one-year Treasury bills yield 8 percent. What type of yield curve is depicted?
A) downward sloping
B) flat or level
C) upward sloping
D) U shaped

Question

Quizplus · Accepted Answer

This yield curve is upward sloping, also known as a normal yield curve. The yields on longer-term securities are higher than those on shorter-term securities, indicating that investors expect interest rates to rise over time.

Assume That These Current Yields Exist: Long-Term Government Securities Yield