- This topic has 1 reply, 2 voices, and was last updated 10 months ago by
.
- Posts
9. Identify, by clicking on the relevant box in the table below, whether the following statements about the term structure of interest rates are true or false.
TrueFalseAn inverted yield curve is where long-term interest rates are higher than short-term interest rates
TrueFalseA rising yield curve is caused when investors prefer to buy long-dated loan notesI DONT GET THE SECOND STATEMENT
A rising yield curve is not caused by investors preferring to buy long-dated loan notes.
Instead, a rising yield curve typically indicates that longer-term interest rates are higher than short-term rates, often due to expectations of future economic growth and inflation.
Therefore, Investors may require higher yields for longer-term investments to compensate for the increased risk and the time value of money.
- You must be logged in to reply to this topic.