Possible shapes for the yield curve include all of the following EXCEPT
A) upward-sloping.
B) humped.
C) horizontal line.
D) vertical line.

Question

Quizplus · Accepted Answer

A yield curve represents the relationship between the interest rates and the time to maturity of debt securities. It can be upward-sloping, humped, or flat (horizontal line), but it cannot be a vertical line, as this would imply that time to maturity has no impact on interest rates, which contradicts the very concept of a yield curve.

Possible Shapes for the Yield Curve Include All of the Following