A yield curve where market participants expect lower future rates of interest is:
A) downward-sloping.
B) upward-sloping.
C) flat.
D) linear.

Question

Quizplus · Accepted Answer

An downward-sloping yield curve indicates that investors expect lower future rates of interest. This could happen if short-term interest rates are expected to decrease, leading to a flatter curve that eventually inverts, with long-term interest rates lower than short-term interest rates.

A Yield Curve Where Market Participants Expect Lower Future Rates