Assume That the Current Corporate Bond Yield Curve Is Upward

question 80

Multiple Choice

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

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

---

Definitions:

Marginal Cost

The outlay involved in generating one more unit of a product.

Buyer's Willingness

The maximum amount a consumer is ready to pay for a good or service, reflecting the value they place on it.

Output Level

The quantity of goods or services produced by a firm or economy at a given time.

Price Discriminate

The practice of selling the same product to different customers at different prices, based on what each customer is willing to pay.