The Term Structure of Interest Rates or the Yield Curve

question 56

Multiple Choice

The term structure of interest rates or the yield curve

• A) is normal when short-term rates are higher than long-term rates.
• B) is inverted when short-term rates are lower than long-term rates.
• C) shows the yield to maturity for securities of equal risk over time.
• D) all of the other answers are correct

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Definitions:

Revenue Accounts

Accounts that track the income earned from a company's primary operations and other activities.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Accounting Period

The span of time at the end of which a company calculates its financial performance, typically a quarter or year.

Journalized

The act of recording a transaction in an accounting journal, documenting the financial activities of a business.