If a Yield Curve Is Upward Sloping, the Investment Strategy

question 4

Multiple Choice

If a yield curve is upward sloping, the investment strategy of buying long-term securities, then selling them after a short period (say, one year) is called

• A) riding the yield curve.
• B) liquidating the yield curve.
• C) segmenting the yield curve.
• D) a forward roll.
• E) none of the above

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Definitions:

Price Ceiling

A government-imposed limit on the price charged for a product or service, intended to prevent prices from rising to levels considered too high for consumers.

Price Floor

A government- or group-imposed price control or limit on how low a price can be charged for a product, service, or commodity.

Equilibrium Price

The market price where the quantity of goods supplied equals the quantity demanded, resulting in market balance.

Quantity

Quantity refers to the amount or number of a material or immaterial item considered as a unit or in plural units.