The yield curve is a graph that shows the relationship between interest rates (or yields) and different maturities of debt securities, illustrating the term structure of interest rates. Typically, it slopes upwards, indicating that longer-term bonds usually offer higher yields than shorter-term bonds, contrary to options B and C.

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The Yield Curve

Question 99

Multiple Choice

The yield curve:

A) is a graph showing the term structure of interest rates.
B) generally shows that longer-term bonds offer lower yields than shorter-term bonds.
C) generally slopes down
D) Both (a) and (b)
E) Both (b) and (c)

Correct Answer: