Which of the following statements is true?
A) Downward sloping yield curves typically appear in the early to mid-period of a business expansion.
B) Interest rate risk premium always adds an upward bias to the slope of the yield curve.
C) If investors believe that inflation will be increasing in the near future, the yield curve will be downward sloping.
D) Downward-sloping yield curve is the yield curve most commonly observed.

Question

Quizplus · Accepted Answer

Interest rate risk premium generally adds an upward bias to the slope of the yield curve, as investors demand higher yields for longer-term investments to compensate for the increased risk.

Which of the Following Statements Is True