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Current corporate bond yield is upward sloping

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What does it mean when a current corporate bond yield is upward sloping?

Assume that the current corporate bond yield curve is upward sloping. Under this condition, then we could be sure that...

a Inflation is expected to decline in the future.
b The economy is not in a recession
c Long-term bonds are a better buy than short-term bonds
d Maturity risk premiums could help to explain the yield curve's upward slope
e Long-term interest rates are more volatile than short-term rates.

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Solution Summary

The current corporate bond yield upward sloping is examined. The maturity risk premiums that would explain a yield curve`s upward slope is analyzed.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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