Using the expectations theory of term structure,a negatively sloped yield curve indicates that investors expect:
A) falling long-term interest rates.
B) rising long-term interest rates.
C) falling short-term interest rates.
D) rising short-term interest rates.

Question

Quizplus · Accepted Answer

According to the expectations theory, a negatively sloped yield curve suggests that investors expect future short-term interest rates to fall.

Using the Expectations Theory of Term Structure,a Negatively Sloped Yield