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Basic Question 5 of 10
The liquidity theory explains why the yield curve is:
B. always upward-sloping.
C. flat or downward-sloping most of the time.
A. upward-sloping most of the time.
B. always upward-sloping.
C. flat or downward-sloping most of the time.
User Contributed Comments 6
| User | Comment |
|---|---|
| mysking | what's the different between A & B? always = most of the tme |
| bmeisner | Mysking doesn't read good. |
| noonah | If future interest rates fall and the long-maturity premiums do not rise enough to compensate, then the curve will not be upward sloping, and hence the "most of the time" |
| AusPhD | bmeisner, you made me laugh out loud, classic! |
| tabulator | cruel, CRUEL bmeisner! |
| bodduna | "most of the time" != "always" |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
explain traditional theories of the term structure of interest rates and describe the implications of each theory for forward rates and the shape of the yield curve;
CFA® 2025 Level II Curriculum, Volume 4, Module 26.