Question

A downward-sloping term structure of interest rates may be an indication of _________. Multiple Choice Issuance...

A downward-sloping term structure of interest rates may be an indication of _________.
Multiple Choice
Issuance of bonds with longer terms to maturity.
Lower expected real rate of interest.
Higher expected future inflation.
Lower expected future inflation.
A downward-sloping term structure of interest rates may be an indication of _________. Multiple Choice Issuance of bonds with longer terms to maturity. Lower expected real rate of interest. Higher expected future inflation. Lower expected future inflation.

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Answer #1

downward sloping term structure of interest rate will be an indication of an impending recession and it will be reflecting that there would be an expectation of lower interest rates in future.

when there is lower expectation of the interest rates in the future, it would be reflected through lower bond yield on long term bonds so it would be reflecting an impending recession.

Other options are not representing the true scenarios.

Correct answer will be option (B) lower expected real rate of interest

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