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SSC Audit Tax Finance P-II QUESTION #6167
Question 1
In Yield Curve Theory, what does an 'Abnormal' or downward-sloping curve typically suggest?
  • Investors expect inflation to rise
  • Long-term interest rates are higher than short-term rates
  • Short-term rates are higher than long-term rates✔️
  • The market is perfectly segmented
Correct Answer Explanation
Lesson 04 defines the Abnormal (Inverted) curve as the case where short-term rates are higher than long-term rates.