Below
is an example of US Treasury yields for various maturities:
6 month: 2.25%
1 year: 2.37%
2 year: 3.15%
5 year: 5.02%
10 year: 5.24%
The curve indicated by these yields is called _____.
a) inverted
b) normal
c) reverse
d) flat
e) treasury
The correct answer is b.
A normal yield curve chart shows longterm debt instruments
having higher yields than shortterm debt instruments.
Sometimes referred to as positive yield curve. The
reason it is "normal" is because you would
expect slightly more risk for holding a bond for a
longer period of time because there is great risk
of default.
An inverted yield curve is when longterm debt instruments
that have lower yields than shortterm debt instruments.
MORE FAQS

What are the different formations of yield curves?

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

How can the yield curve help me make investment decisions?

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

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

A diagram of yields on debt instruments shows that shortterm interest rates are higher than longterm ...

What does market segmentation theory assume about interest rates?

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

How can I create a yield curve in Excel?

Why are treasury bond yields important to investors of other securities?

Why is term structure theory of importance to economists?

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

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

How is the interest rate on a treasury bond determined?

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

What schools did Warren Buffett attend on his way to getting his science and economics degrees?

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

What's the average salary of a market research analyst?
RELATED FAQS

What are the different formations of yield curves?
Find out more about the yield curve and yield curve formations, what yield curves measure and the three main types of yield ... 
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 ... 
How can the yield curve help me make investment decisions?
Learn about the yield curve, and discover why this chart is an important economic indicator. How do Treasury bond yields ... 
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 ... 
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 ... 
A diagram of yields on debt instruments shows that shortterm interest rates are ...
The correct answer is a. An inverted—or negative—yield curve is an unusual situation that generally indicates an unhealthy ...

Normal Yield Curve
A yield curve in which shortterm debt instruments have a lower ... 
Inverted Yield Curve
An interest rate environment in which longterm debt instruments ... 
Term Structure Of Interest Rates
The relationship between interest rates or bond yields and different ... 
Yield Curve
A line that plots the interest rates, at a set point in time, ... 
Yield Curve Risk
The risk of experiencing an adverse shift in market interest ... 
Humped Yield Curve
A relatively rare type of yield curve that results when the interest ...