Empirical evidence suggests that the reason that the yield curve is usually upward sloping is that
A)long-term bonds are a better buy than short-term bonds.
B)investors are expecting higher interest rates due to anticipated changes in the economy.
C)investors are expecting higher inflation in the future.
D)long-term bonds are perceived as riskier than short-term bonds.

Question

Quizplus · Accepted Answer

Long-term bonds are perceived as riskier than short-term bonds, leading investors to demand a higher yield for holding them over a longer period, which typically results in an upward-sloping yield curve.

Empirical Evidence Suggests That the Reason That the Yield Curve