"Riding the yield curve" involves

Question

Quizplus · Accepted Answer

"Riding the yield curve" involves buying securities with maturities greater than the investment horizon, fully intending to liquidate them prior to maturity. This strategy works best with an upward-sloping yield curve, where longer-term securities have higher yields than shorter-term securities. By purchasing longer-term securities and selling them before maturity, investors can benefit from both the higher yield and potential capital gains due to the decrease in interest rates as the security approaches maturity. This strategy is not directly related to investing when the yield curve shifts, investing the same amount each period, or investing in adjustable rate securities.

"Riding the Yield Curve" Involves