When the yield declines as maturity increases, the yield curve is said to be:
A) Inverted.
B) Downward sloping.
C) Positive.
D) Negative.
E) a, b, and d only.

Question

Quizplus · Accepted Answer

An inverted yield curve occurs when long-term yields fall below short-term yields, which is reflected by a downward sloping curve, often interpreted as a negative signal in the context of future economic growth.

When the Yield Declines as Maturity Increases, the Yield Curve