An Inverted Yield Curve

question 35

Multiple Choice

An inverted yield curve

• A) Exists when short-term rates exceed long-term rates.
• B) Exists when long-term rates exceed short-term rates.
• C) Represents the "normal term structure."
• D) Signifies that investors can get higher returns by investing in bonds than by investing in stocks.
• E) Signifies that investors can get higher returns on stocks than on bonds.

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's bookkeeping system is mathematically correct.

Ledger Accounts

Individual records that summarize transactions related to a specific account within the general ledger.

Debits

An accounting entry that results in either an increase in assets or a decrease in liabilities or equity on a company's balance sheet.

Credits

Accounting entries that increase liabilities or equity, or decrease assets.