Yield curve, by defination, is the plot of relationship between bond yields and maturity.

1) What is the common shape of yield curve? (Hint: Is it upward sloping or downward sloping?)

2) Explain why it is shaped the way you describe in 1)? (Hint: specify the risk associated with the yield curve)

3) What is inverted yield curve? Please explain why it shapes like that.

4) What is the implication of inverted yield curve? So basically what can we learn once inverted yield curve is identifed.