The Normal Yield Curve Is Upward Sloping Implying That

question 5

Multiple Choice

The normal yield curve is upward sloping implying that

• A)the return on short-term securities are higher than the return on long-term securities of similar risk.
• B)the return on long-term securities are equal to the return on short-term securities of similar risk.
• C)the return on short-term securities are lower than the return on long-term securities of similar risk.
• D)the return on bonds with a higher default risk is higher than the returns on bonds with lower default risk.
• E)the return on bonds with a lower default risk is higher than the returns on bonds with higher default risk.

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Definitions:

Semipermeable Membrane

A membrane that allows the passage of certain molecules or ions but restricts others, crucial in processes like osmosis.

High Temperatures

Conditions involving elevated temperatures, often influencing chemical reactions or physical states of matter.

Activation Energy

The minimum amount of energy required to initiate a chemical reaction.

Endergonic

A chemical reaction in which the standard change in free energy is positive, and energy is absorbed from the surroundings.