The term structure of interest rates defines the relationship
A)between risk and return.
B)between risk and maturity.
C)between maturity and yield.
D)between default risk ratings and maturity.

Question

Quizplus · Accepted Answer

The term structure of interest rates, often represented by the yield curve, shows the relationship between the maturity (the term) of debt securities and their yield. This relationship illustrates how the yield changes with varying maturities, typically showing that longer maturities have higher yields if the curve is upward sloping, which is the most common scenario.

The Term Structure of Interest Rates Defines the Relationship