Final answer:
The term 'term structure of interest rates' refers to the relationship between interest rates and the maturity of debts, not just short-term funds. It includes rates for a variety of maturities and reflects the risk and expectations for the future. The statement from the question is false because the term structure of interest rates encompasses both short-term and long-term maturities.
Step-by-step explanation:
The term "term structure of interest rates" indeed depicts the relationship between the interest rates on debt securities and their time to maturity. However, the statement that it represents only the short-term sources of funds is incorrect. The term structure encompasses a range of maturities, from short-term debt instruments like Treasury bills to long-term debt securities like Treasury bonds and corporate bonds. It is a representation of the yields available to investors at a given time for various time horizons in the bond market, reflecting the compensation investors require - given their expectations on future interest rates, inflation, and the various risk levels associated with different time frames and issuers.
Interest rates for corporate bonds and U.S. Treasury bonds do rise and fall together, influenced by monetary policy and market conditions. Nonetheless, corporate bonds typically carry a higher interest rate than Treasury bonds due to the additional risk of default; a concept known as the risk premium. Suppliers of funds, like banks issuing CDs, would also set their rates according to these risk and duration considerations