Capital MarketsQuestion 339 of 398
A normal (positive) yield curve is best described as one in which:
a.Longer-term bonds have higher yields than shorter-term bonds
b.Shorter-term bonds have higher yields than longer-term bonds
c.All maturities have exactly the same yield
d.Yields have no relationship to maturity
Explanation
A normal yield curve slopes upward, meaning longer-term debt carries higher yields than shorter-term debt to compensate investors for the added risk and time. An inverted yield curve, where short-term yields exceed long-term yields, is often watched as a potential recession signal.
Practice all 398 questions free — no signup required.
Related questions on this topic
- A common technical definition of a recession is:
- The Consumer Price Index (CPI) is primarily used to measure:
- As market interest rates rise, what generally happens to the prices of existing fixed-rate bonds?
- An inverted yield curve, in which short-term yields are higher than long-term yields, is often viewed by economists as a potential signal of:
- During the expansion (recovery) phase of the business cycle, which of the following is typically observed?
- Which sequence correctly lists the four phases of the business cycle?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review