A downward sloping yield curve indicates that future short-term rates are expected to ______ and outstanding security prices will _______.
A) fall; rise.
B) fall; fall.
C) rise; rise.
D) rise; fall.

Question

Quizplus · Accepted Answer

A downward sloping yield curve suggests that future short-term interest rates are expected to fall, which typically leads to an increase in the prices of outstanding securities.

A Downward Sloping Yield Curve Indicates That Future Short-Term Rates