If the Yield Curve Is Upward Sloping, Some Investors May

question 47

True/False

If the yield curve is upward sloping, some investors may attempt to benefit from the higher yields on longer-term securities, even when they have funds for only a short period of time. This strategy is known as riding the yield curve.

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash at a reasonable price in the short term.

Money Market

A segment of the financial market in which financial instruments with high liquidity and short maturities are traded.

Interest Rate Risk

The potential for investment losses due to changes in interest rates.

Marketable Securities Portfolio

This refers to a collection of liquid financial instruments that a company or individual holds, which can be quickly sold in the market to raise cash.