Maturity (Years) 1 5 10 20 30 Yield (%) 5.5 5.0 4.7 4.4 3.8 On the following gra

Question

Maturity (Years) 1 5 10 20 30 Yield (%) 5.5 5.0 4.7 4.4 3.8 On the following graph, plot the yield curve implied by these interest rates. Place a blue point (circle symbol) at each maturity and interest rate in the table, and the yield curve will draw itself Tool tip: Mouse over the points on the graph to see their coordinates INTEREST RATE (Percent] 10 Yield Curve 10 25 MATURITY (Years) 15 20 30 Clear ALL The graph's yield curve represents yield curve Based on the yield curve shown, which of the following statements is true? O If inflation in the future is expected to increase, the yield curve on U.S. Treasuries is likely to be downward sloping O Interest rates on short-term maturities are higher than rates on medium- and long-term maturities

Explanation / Answer

1.
Downward or Inverted
2.
Interest rates on short-term maturities are higher than rates on medium-and long-term maturities
3.
Normal or Upward
4.
Humped
5.
Flat
6.
Inverted

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