The slope and the position of the yield curve depicts
A)the term structure of interest rates.
B)the term structure of tax treatment.
C)the term structure of stock options.
D)the term structure of credit risk.

Question

Quizplus · Accepted Answer

The term structure of interest rates is best represented by the slope and position of the yield curve. The yield curve shows the relationship between short-term and long-term interest rates and can provide insight into expectations for economic growth and inflation. A steep yield curve implies higher long-term interest rates relative to short-term rates, which may indicate expectations for future economic growth. A flat or inverted yield curve, where long-term rates are lower than short-term rates, may indicate expectations for slowing economic growth or even a recession.

The Slope and the Position of the Yield Curve Depicts