Possible shapes for the yield include all of the following except ____________.
A) Humped
B) Downward sloping
C) Flat
D) All of these are possible shapes.

Question

Quizplus · Accepted Answer

All of the three shapes are possible for the yield curve. The yield curve can be characterized as humped when the intermediate-term interest rates are higher than the short-term and long-term rates. The yield curve is downward sloping when shorter-term debt instruments have higher yields than longer-term debt instruments. A flat yield curve occurs when there is no yield difference between short and long-term bonds.

Possible Shapes for the Yield Include All of the Following