If yields on long-term bonds are lower than the yields on short-term bonds, the term structure...

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Question

If yields on long-term bonds are lower than the yields on short-term bonds, the term structure...

If yields on long-term bonds are lower than the yields on short-term bonds, the term structure is said to be

Question 10 options:

	upward sloping
	downward sloping
	flat
	humped

business finance

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Answer 1

Answer #1

Answer:

Correct answer is:

downward sloping

Explanation:

Normal yield curve is upward sloping with longer term bonds yielding higher return than short term bonds. But when yields on long-term bonds are lower than the yields on short-term bonds, the term structure is said to be downward sloping.

Flat yield curve will result if yields of both long term and short terms bonds are same.

Option B is correct and other options A, C and D are incorrect.

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Answer 2

Answer #2

Upward sloping

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Answer 3

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