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:

Definition Of Security

A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Resold Without Registration

Referring to the sale of securities without registering them with the required regulatory body, often not in compliance with securities law.

Most Securities

Financial instruments that signify ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives) that investors can buy and sell.

Meaningful Cautionary Statements

Communications that provide important warnings or advisements to prevent harm or misuse of a product or service.