Assume That the Current Corporate Bond Yield Curve Is Upward

question 36

Multiple Choice

Assume that the current corporate bond yield curve is upward sloping.Under this condition, then we could be sure that

• A) The economy is not in a recession.
• B) Long-term bonds are a better buy than short-term bonds.
• C) Maturity risk premiums could help to explain the yield curve's upward slope.
• D) Long-term interest rates are more volatile than short-term rates.
• E) Inflation is expected to decline in the future.

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Definitions:

Deep Inspiration

A large intake of breath that increases lung volume and decreases intrapleural pressure, facilitating the intake of oxygen.

Pectoralis Major

A large muscle in the upper chest that aids in the rotation and movement of the arm across the body.

Diaphragm

A large, dome-shaped muscle located below the lungs that contracts and relaxes to aid in the breathing process.

Flexor Digitorum Profundus

A muscle located in the forearm that flexes the fingers at the distal interphalangeal joints.