Question

A yield curve that reflects relatively similar borrowing costs for both short-term and long-term loans is called as ________.

Select one:

a. flat yield curve

b. inverted yield curve

c. normal yield curve

d. lognormal curve

Answer 1

Option a is correct

A yield curve that reflects relatively similar borrowing costs for both short-term and long-term loans is called as flat yield curve

If the yield curve is flat, then the borrowing costs for both short-term and long-term loans is very similar.

Option b is incorrect because in an inverted yeild curve, the borrowing costs for long term is lower than that for short-term loans.

Option c is incorrect because in a normal yield curve, the borrowing costs for short-term is lower than that for long-term loans.

Option d is incorrect because a log-normal curve just reduces the steepness of the curve