SIE Exam Question 698: Answer and Explanation

Question: 698

If the yield curve is __________, then the spread between yields of short-term and long-term bonds is __________.

• A. flattening, decreasing
• B. flattening, increasing
• C. steepening, decreasing
• D. None of the above are correct.

Correct Answer: A

Explanation:

If the yield curve is flattening, then the spread between yields of short-term and long-term bonds is decreasing.