An inverted yield curve
A) Exists when short-term rates exceed long-term rates.
B) Exists when long-term rates exceed short-term rates.
C) Represents the "normal term structure."
D) Signifies that investors can get higher returns by investing in bonds than by investing in stocks.
E) Signifies that investors can get higher returns on stocks than on bonds.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when short-term interest rates are higher than long-term rates, indicating investors' expectations of a future economic slowdown.

An Inverted Yield Curve