In general,an upward-sloping term structure implies that investors expect future short-term interest rates to:
A)decrease.
B)increase.
C)be the same as the current rate.
D)increase by a minimum of 5bp.

Question

Quizplus · Accepted Answer

An upward-sloping term structure, also known as a normal yield curve, indicates that investors expect future short-term interest rates to increase. This expectation is reflected in the higher yields offered by longer-term bonds compared to shorter-term bonds. This makes sense as investors would demand a higher return to tie up their money for a longer period of time if they anticipate interest rates to rise in the future.

In General,an Upward-Sloping Term Structure Implies That Investors Expect Future