Question

An inverted yield curve would suggest that interest rates are expected to rise. interest rates are...

An inverted yield curve would suggest that
interest rates are expected to rise.
interest rates are expected to fall.
inflation is expected to rise in the future.
long-term rates are being pushed up by Federal Reserve policy.
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Answer #1

An inverted yield curve means that interest rate are expected to fall.

Yield curve shows yield on securities across different maturities of security.

Yield curve have following three primary shapes:-

1. Upward Sloping (Positive yield curve):- When short term yields are lower than long term yield which means interest rate are expected to rise.

2. Downward Sloping (Inverted yield curve):- When short term yields are higher than long term yield which means interest rate are expected to fall.

3. Flat yield curve:- When short term yield and long term yield are same.

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