A normal yield curve a.has an upward slope b.is a sign of a coming recession c.indicates that the interest rate will decrease in the future d.All of the above.
A normal yield curve
A normal yield curve is a graphical representation of the relationship between the interest rates of bonds with different maturities. Typically, a normal yield curve shows that long-term bonds have a higher interest rate than short-term bonds. In other words, the yield curve slopes upward from left to right.
This pattern of a normal yield curve indicates that investors expect that the economy will grow in the future, and that inflation will increase as well. As a result, they demand a higher return for investing in longer-term bonds to compensate for the increased risk of inflation.
A normal yield curve is usually contrasted with other types of yield curves such as inverted yield curve, flat yield curve or humped yield curve, which can provide different insights into the market's expectations for future economic growth and inflation.
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