If the Treasury Yield Curve Is Downward Sloping,how Should the Yield

question 74

Multiple Choice

If the Treasury yield curve is downward sloping,how should the yield to maturity on a 10-year Treasury coupon bond compare to that on a 1-year T-bill?

• A) The yield on a 10-year bond would be less than that on a 1-year bill.
• B) The yield on a 10-year bond would have to be higher than that on a 1-year bill because of the maturity risk premium.
• C) It is impossible to tell without knowing the coupon rates of the bonds.
• D) The yields on the two securities would be equal.
• E) It is impossible to tell without knowing the relative risks of the two securities.

---

Definitions:

T Wave

A feature on an electrocardiogram (ECG) representing the repolarization of the ventricles of the heart.

R Wave

Part of the QRS complex in an electrocardiogram (ECG) representing ventricular depolarization, which precedes ventricular contraction.

Heart Skeleton

A framework of dense connective tissue in the heart that provides structural support and attachment for cardiac muscle and valves.

Ectopic Stimuli

Electrical or chemical signals occurring at an abnormal location or time in the body, often resulting in irregular physiological responses such as ectopic heartbeats.