Observations of the yield curve suggest that when interest rates are high and investors expect interest rates to fall, the yield curve will have a(n)
A) upward slope.
B) downward slope.
C) horizontal slope.
D) vertical slope.

Question

Quizplus · Accepted Answer

When interest rates are high and investors expect them to fall, the yield curve typically has a downward slope. This is because longer-term securities are expected to yield less than short-term securities, reflecting the anticipated decline in rates.

Observations of the Yield Curve Suggest That When Interest Rates