Question: Please explain how the answer sell, buy, become inverted. is correct in 3 sentences. Assume that yields on short-term and long-term securities are equal (i.e.,
Please explain how the answer "sell, buy, become inverted." is correct in 3 sentences.
Assume that yields on short-term and long-term securities are equal (i.e., a flat yield curve). If financial market participants suddenly believed the Federal Reserve bank will decrease interest rates soon, they may short-term securities, long-term securities, and through these actions may cause the yield curve to Xbuy, sell, become upward sloping. sell, buy, become upward sloping. buy, sell, become inverted, sell, buy, become inverted
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