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Exam CIFC Topic 1 Question 103 Discussion

Actual exam question for IFSE Institute's CIFC exam
Question #: 103
Topic #: 1
Which of the following is typical for a normal yield curve?

Suggested Answer: D Vote an answer

Explanation
A yield curve is a graphical representation of the relationship between the interest rates (or yields) and the term to maturity of different fixed income securities, such as bonds or debentures. A normal yield curve is upward sloping, meaning that the interest rates increase as the term to maturity increases. This is because investors typically demand higher compensation for lending their money for longer periods of time, as they face more uncertainty and risk. Therefore, a normal yield curve implies that short term rates are lower than long term rates.
References: Canadian Investment Funds Course, Unit 5, Section 5.2

by Samuel at Dec 06, 2023, 08:33 AM

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