1. Should a Yield Curve Influence a Borrower’s Preferred Maturity of a Loan?
2. Over the last six months, the long-term yields declined, while short-term yields remained the same. Analysts stated that the shift was due to revised expectations of interest rates. Given the shift in the yield curve, does it appear that firms increased or decreased their demand for long-term funds over the last six months?
3. Explain why an anticipated recession could force the yield curve to shift downwards.