An upward-sloping yield curve
A) may be an indication that interest rates are expected to increase.
B) may incorporate a liquidity premium.
C) may reflect the confounding of the liquidity premium with interest rate expectations.
D) All of the options are correct.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

An upward-sloping yield curve can indicate expectations of rising interest rates, incorporate a liquidity premium, and reflect the combination of the liquidity premium with interest rate expectations.

An Upward-Sloping Yield Curve