Asked by Shannon Bubar on Apr 27, 2024
Verified
Which of the following statements is/are TRUE?
A) A yield curve plots interest rates against time to maturity.
B) A normal yield curve is upward sloping.
C) Average expected inflation is reflected in interest rates.
D) Both a & c
E) All of the above
Yield Curve
A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.
Normal Yield Curve
A graphical representation that shows interest rates on bonds of different maturities tend to increase the longer the term to maturity, under normal market conditions.
Expected Inflation
The anticipated rate at which the general level of prices for goods and services will rise over a period.
- Describe the structural framework of interest rates and the assorted forms of the yield curve.
- Elucidate the determinants that affect the configuration of interest rate term structures and the development of yield curves.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
E
Explanation :
All of the given statements are true. A yield curve displays the relationship between interest rates and time to maturity, a normal yield curve is indeed upward sloping, and average expected inflation is reflected in interest rates.
Learning Objectives
- Describe the structural framework of interest rates and the assorted forms of the yield curve.
- Elucidate the determinants that affect the configuration of interest rate term structures and the development of yield curves.