Q:
A:
A diagram of yields on debt instruments
shows that shortterm interest rates are higher than
longterm interest rates. What is this called, and
what does it indicate?
a) An inverted yield curve indicating an unhealthy
economy
b) A flat yield curve indicating slow growth
c) A positive yield curve indicating prosperity
d)
A balanced yield curve indicating rapid expansion
in the short term
The correct answer is a.
An inverted—or negative—yield curve is an unusual situation that generally indicates an unhealthy economy marked by low confidence and high inflation.
An inverted—or negative—yield curve is an unusual situation that generally indicates an unhealthy economy marked by low confidence and high inflation.
MORE FAQS

Why are the term structure of interest rates indicative of future interest rates?

Below is an example of US Treasury yields for various maturities ...

What is the difference between term structure and a yield curve?

What is the current yield curve and why is it important?

Where on the Internet can I find yield curves over various periods?

What is the correlation between term structure of interest rates and recessions?

How can I create a yield curve in Excel?

What is the difference between the yield of stock and the yield of a bond?

What is the Coppock curve?

What does it signify if the term structure of an interest rate's curve is positive?

How does the Fisher effect illustrate returns on bonds?

Which economic factors impact treasury yields?

Can I use the current yield to compare a bond to an equity investment?

What are leading, lagging and coincident indicators? What are they for?

A “normal market” is also called a (an): A) Inverted market b) Carrying charge market c) Premium market ...

Are dividends the best way to make money for retirement?

How many attempts at each CFA exam is a candidate permitted?

What's the average salary of a financial advisor?

Why is Hong Kong considered a tax haven?

Is smart beta cheaper than hedge funds?
RELATED FAQS

Why are the term structure of interest rates indicative of future interest rates?
Learn why economists believe the term structure for interest rates reflects investor expectations for future interest rates ... 
Below is an example of US Treasury yields for various maturities ...
The correct answer is b. A normal yield curve chart shows longterm debt instruments having higher yields than shortterm ... 
What is the difference between term structure and a yield curve?
Understand the difference between the term structure of interest rates and a yield curve, if any. Learn what the yield curve ... 
What is the current yield curve and why is it important?
Understand what the current yield curve represents, and learn how market analysts commonly interpret various changes in the ... 
Where on the Internet can I find yield curves over various periods?
Find out where to locate reliable yield curve information on the Internet, including the U.S. Department of the Treasury ... 
What is the correlation between term structure of interest rates and recessions?
Discover the importance of the term structure of interest rates, also known as the yield curve, and its predictive power ...
RELATED TERMS

Normal Yield Curve
A yield curve in which shortterm debt instruments have a lower ... 
Term Structure Of Interest Rates
The relationship between interest rates or bond yields and different ... 
Flat Yield Curve
A yield curve in which there is little difference between shortterm ... 
Inverted Yield Curve
An interest rate environment in which longterm debt instruments ... 
Yield Elbow
The point on the yield curve indicating the year in which the ... 
Yield Curve
A line that plots the interest rates, at a set point in time, ...