The normal yield curve is upward sloping implying that
A)the return on short-term securities are higher than the return on long-term securities of similar risk.
B)the return on long-term securities are equal to the return on short-term securities of similar risk.
C)the return on short-term securities are lower than the return on long-term securities of similar risk.
D)the return on bonds with a higher default risk is higher than the returns on bonds with lower default risk.
E)the return on bonds with a lower default risk is higher than the returns on bonds with higher default risk.

Question

Quizplus · Accepted Answer

The normal yield curve is upward sloping, which means that the return on short-term securities is lower than the return on long-term securities of similar risk. This is because investors demand a higher return for tying up their money for a longer period of time.

The Normal Yield Curve Is Upward Sloping Implying That