The term structure of interest rates

Question

Quizplus · Accepted Answer

The term structure of interest rates reflects investors' expectations about inflation and future interest rates. The shape of the yield curve can vary depending on the current state of the economy. If short-term interest rates are higher than long-term rates, the yield curve will be downward sloping. Under normal conditions, the yield curve will be upward sloping, with long-term rates higher than short-term rates. Therefore, all of the choices are correct.

The Term Structure of Interest Rates