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http://courses aplia com afsere quiz?qur_actionstake uiz&qu; Aplia Student uestion x eChegg Study Guided Solutio Macro Economics Chegg.com Dyer, FINK 301 Prin Fin Mgmt Spring 2016 yassine hicham Customer Support Sign Out Home Grades Personalized Reviews Discussion Course Materials The Cost of Money (Interest Rates) Graded Assignment | Read Chapter 5 | Back to Assignment Due Monday 04.11.16 at 10:45 PM Attempts: Keep the Highest: /3 2. More basic concepts: alternative shapes of yield curves Aa Aa A yield curve is a graphical representation of the relationship between the yields and the maturities of securities issued by a given borrower in a given currency on a given date. The mathematical relationship between these two variables, the yield and the maturity, is called the term structure of interest rates, and the graphical relationship (plotted curve) is called the yield curve A yield curve can exhibit a variety of shapes, and the general shapes have been given a specific name. Identify the name of the yield curve that matches the pattern described as follows: Name Given to Describe the Yield Curve Description of the Yield Curve The yield curve exhibits an upward-sloping path The yield curve exhibits a zero slope Short-term rates are greater than long-term rates Normal yield curve Humped yield curve Inverted yield curve Flat yield curve Flash Player WIN 20,0,0,228 Q3 3.34 © 2004-2016 Aplia. All rights reserved. © 2013 Cengage Learning except as noted. All rights reserved. Grade It Now Save & Continue Copyright Notices Terms of Use Privacy Notice Security Notice Accessibility Session 59:29 Timeout 12:03 PM 4/8/2016Explanation / Answer
1. Normal yield curve
When the yield and maturity both are positively related to each other, that is, as the maturity goes up, the yield is higher or yield on long term bonds is more than the short term.
2. Flat yield curve.
Yield is same for short and long term bonds.
3. Inverted yield curves.
The yield and the maturities do not have positive relation, as yield falls as the maturity period is long.
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