#1
Which of the following is NOT a type of yield curve?
Sloping yield curve
ExplanationSloping yield curve.
#2
What is the primary determinant of a bond's yield?
#3
What does the term 'term structure of interest rates' refer to?
The relationship between the interest rates and the time to maturity of debt
ExplanationInterest rates vs. time to maturity.
#4
What happens to bond prices when interest rates rise?
Bond prices fall
ExplanationBond prices decrease with rising rates.
#5
Which term refers to the risk that a bond issuer will default on its payments?
Credit risk
ExplanationRisk of bond issuer default.
#6
Which of the following best describes the term structure of interest rates?
It represents the relationship between bond yields and bond maturities.
ExplanationBond yields vs. bond maturities.
#7
What does the term 'yield curve' represent in the context of interest rates?
A graph showing the relationship between bond yields and their time to maturity.
ExplanationGraph of bond yields vs. time to maturity.
#8
What does an upward-sloping yield curve typically indicate?
An expectation of rising interest rates in the future.
ExplanationAnticipation of rising interest rates.
#9
What term describes a yield curve where short-term interest rates are higher than long-term rates?
Inverted yield curve
ExplanationShort-term rates > Long-term rates.
#10
What is the term for the risk that rising interest rates will cause the value of a bond to fall?
Interest rate risk
ExplanationRisk of falling bond value due to rising rates.
#11
Which of the following factors is NOT typically considered in determining the shape of the yield curve?
Unemployment rates
ExplanationUnemployment rates.
#12
What does a 'flat' yield curve suggest about future interest rate expectations?
Stable interest rates with little change expected.
ExplanationStable interest rates.
#13
What is the primary reason for the existence of a normal yield curve?
Compensation for the time value of money.
ExplanationCompensation for time value of money.
#14
What is the primary driver of changes in the shape of the yield curve?
Shifts in monetary policy
ExplanationMonetary policy shifts.
#15
What does the slope of the yield curve typically indicate about future economic conditions?
A downward-sloping curve suggests economic recession
ExplanationDownward slope indicates recession.