4. 4: Interest Rates: Term Structure of Interest Rates The term structure of interest rates describes the relationship between long and short-term rates. When these data are plotted, the resulting graph is called a vield curve. An) CSC yield curve is upward sloping because investors charge higher rates on longer term bonds, even when inflation is expected to remain constant An). Select yield Curve occurs when Interest rates on intermediate-term maturities are higher than rates on both short and long-term matunties. Ain) Safest wyield curve is downward sloping and indicates that investors expect inflation to decrease the shape of the weld curve depends on expectations about future inflation and the effects of maturity on bonds risk Because of their additional default and liquidity risk, corporate bonds yield elect Treasury bonds with the same maturity. In addition, the yield spread between corporate and Treasury bonds Select the longer the maturity. This occurs because longer-term corporate bonds have select defauit and liquidity risk than sharter-term bonds, and both of these premiums are in Treasury bonds