Ans
No he is not at all saying one is higher than other
Actually he is saying when long term interest rates are expected to be higher than short term rates yield curve is upward sloping. This happens quite often and is normal
But sometimes longterm rates are expected to be lower than short term rates. This is more likely in case of recession when there is pessimism.in this case yield curves will be inverted. This happens rarely
Why does my teachers notes say you get a higher return on a long term security...
Why do long term securities have a higher return than short term securities ?
Which of the following is NOT true: Yields on long-term bonds are always higher than short-term bonds. The yield curve charts the annual interest rates paid on bonds of various maturities. None of these. Investors compare the yields of securities of various maturities to understand the prospects for future market growth and inflation. The slope of the yield-curve reflects investor sentiment about the overall health of the economy.
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