An inverted yield curve is one
A) with a hump in the middle.
B) constructed by using convertible bonds.
C) that is relatively flat.
D) that plots the inverse relationship between bond prices and bond yields.
E) that slopes downward.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality, which is represented graphically by a curve that slopes downward.

An Inverted Yield Curve Is One