Which of the following is most likely to occur if there is a twist in the yield curve? A. The curvature of the yield curve increases. B. The yield curve flattens or steepens. C. The yield curve becomes humped at intermediate maturities.
Twists refer to yield curve changes when the slope becomes either flatter or more steep. A flattening (steepening) of the yield curve means that the spread between short- and long-term rates has narrowed (widened).
