n NISM Certifications
NSM General NISM
Medium

What does a 'Normal' shape of the term structure indicate?

Practice question from NISM Series IV - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Same for all terms

  2. Rate rises with the term

    Correct answer

  3. C

    Rate falls with the term

  4. D

    Rises then falls with the term

Why this is the answer

A normal yield curve slopes upward, indicating longer-term rates are higher.

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