Yield curve plots the relationship between bond yields and maturity. One can infer the future levels of interest rates by examining the shape of the yield curve. In general, yield curves are upward sloping because investors may require more yield to invest in longterm bonds. First, as maturity increases, uncertainty in investing long-term bonds is higher. Second, prices of long-term bonds fluctuate more with the changes in interest rates. Long-term bonds have higher interest rate risk. Upward sloping yield curve implies that short-term interest rates will increase in the future.

As also understood from the information given, the statements in the options I, II, III and IV are correct, so the correct answer is D. The statement in the option V is not correct because of the fact that upward sloping yield curve implies that short-term interest rates will increase in the future.