SIE - Securities Industry Essentials Exam
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If the yield curve is inverted,
T Notes may have a lower yield than T Bonds.
A
T Bonds may have a higher yield than T Bills.
B
T Notes may have a higher yield than T Bonds.
C
T Bills may have a lower yield than T Bonds.
D
Explanations
Remember the maturities! T Bills are the shortest terms, then T Notes, then T bonds. In a normal yield curve, Bills have the lowest yield, Notes slightly higher, and Bonds the highest. When inverted, the T notes (2 - 10 years) may have a higher yield than the T Bonds (10 to 30 years).