The term structure of interest rates
A)represents the variation in yields for related instruments differing in maturity.
B)reflects differing tax treatment received by different instruments.
C)always results in an upward-sloping yield curve.
D)usually results in a downward-sloping yield curve.

Question

Quizplus · Accepted Answer

The term structure of interest rates represents the variation in yields for related instruments differing in maturity, generally resulting in a yield curve that can be upward-sloping, downward-sloping, or flat depending on various factors such as market expectations and economic conditions. The term structure is not related to tax treatment of different instruments, as stated in choice B.

The Term Structure of Interest Rates