An Upward-Sloping Yield Curve That Indicates Generally Cheaper Short-Term Borrowing

question 123

Multiple Choice

An upward-sloping yield curve that indicates generally cheaper short-term borrowing costs than long-term borrowing costs is called

• A) an inverted yield curve.
• B) a flat yield curve.
• C) a normal yield curve.
• D) none of the above.

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Definitions:

Nominal Annual Rate

The interest rate stated on a loan or investment agreement, not adjusting for inflation or the compounding of interest.

Developing-Country

A developing country refers to a nation with a lower level of industrialization, lower living standards, and sometimes a lower Human Development Index (HDI) compared to developed countries.

Compounded Monthly

An interest calculation method where interest is added to the principal sum at the end of each month, with each subsequent month earning interest on the new total.

Nominal Rate

The nominal rate is the stated interest rate on a loan or financial product, not adjusted for inflation.