What Is the Shape of the Yield Curve Given the Data

question 49

Multiple Choice

What is the shape of the yield curve given the data on the three zero coupon bonds in the table below? (Assume that each bond has a face value of $1,000.) $$\begin{array} { | c | c | c | } \hline \text { Term } & \text { Price } & \text { Yield } \\\hline \text { 1 Year } & \$ 935 & 7 \% \\\hline \text { 2 Years } & \$ 882 & 6.5 \% \\\hline \text { 3 Years } & \$ 840 & 6 \% \\\hline\end{array}$$

• A)Downward sloping
• B)Upward then downward sloping
• C)Downward then upward sloping
• D)Upward sloping
• E)Flat

---

Definitions:

Four-Temperament Profile

A personality classification system that divides individuals into four categories based on behavior traits: sanguine, choleric, melancholic, and phlegmatic.

Supporter

A person who tends to be cooperative, honest, sensitive, warm, and understanding.

Bodily/Kinesthetic Learner

A learning style where individuals learn best through physical activities like moving, doing hands-on tasks, and using body language.

Extroverted

Pertaining to individuals who are outgoing, sociable, and draw energy from interacting with other people.