The yield curve is a graph of the interest rate on bonds of different terms, with the term shown on the horizontal axis and the interest shown on the vertical axis. Based on the discussion in chapter 10, what slope would you expect the yield curve to have?
A) No slope - flat
B) A negative slope - downward-sloping
C) A positive slope - upward-sloping
D) Negative at first, then positive

Question

The yield curve is a graph of the interest rate on bonds of different terms, with the term shown on the horizontal axis and the interest shown on the vertical axis. Based on the discussion in chapter 10, what slope would you expect the yield curve to have? 
A) No slope - flat
B) A negative slope - downward-sloping
C) A positive slope - upward-sloping
D) Negative at first, then positive

Quizplus · Accepted Answer

According to the discussion in chapter 10, the yield curve is typically upward-sloping (positive slope), with long-term bonds having higher interest rates than short-term bonds. This is known as a normal yield curve, reflecting the expectation of future economic growth and inflation.

The Yield Curve Is a Graph of the Interest Rate