The flat yield curve of a bond issued by a small bank may indicate that
| A. |
interest rates are expected to be unchanged. |
|
| B. |
interest rates are expected to increase. |
|
| C. |
interest rates are expected to decrease. |
|
| D. |
all of the options. |
A. interest rate are expected to be unchanged.
Yield curve is a relationship between yield rate and maturity of bond. If yield curve is flat then yield rate remain same with increase in maturity. If yield curve is upward sloping it means yield rate will increase with increase in maturity and if yield curve is downward sloping it means yield rate will decrease with increase in maturity of bond.
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The flat yield curve of a bond issued by a small bank may indicate that A....