If yields on long-term bonds are lower than the yields on short-term bonds, the term structure is said to be
A)humped.
B)downward sloping.
C)flat.
D)upward sloping.

Question

Quizplus · Accepted Answer

When long-term bond yields are lower than short-term bond yields, it indicates a downward sloping term structure. This is also called an inverted yield curve and is typically seen as a sign of economic uncertainty and potential recession.

If Yields on Long-Term Bonds Are Lower Than the Yields