If the yield curve is inverted, a portfolio manager can take advantage of this by:
A) pricing more deposits on a fixed-rate basis.
B) buying more long-term securities
C) making variable-rate, callable loans.
D) increasing the number of rate-sensitive assets.
E) All of the above.

Question

Quizplus · Accepted Answer

When the yield curve is inverted, it means that short-term interest rates are higher than long-term rates. Buying more long-term securities can be advantageous because they lock in higher yields available in the short term, anticipating that rates will fall in the future.

If the Yield Curve Is Inverted, a Portfolio Manager Can