Which of the Following Statements Is CORRECT

question 51

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• B) If the maturity risk premium (MRP)equals zero,the Treasury bond yield curve must be flat.
• C) If inflation is expected to increase in the future and the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• D) If the expectations theory holds,the Treasury bond yield curve will never be downward sloping.
• E) Because long-term bonds are riskier than short-term bonds,yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.

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Definitions:

Pie Graph

A circular chart divided into sectors, each sector shows the relative size of some data.

Histogram

A graphical representation showing a frequency distribution where the data is grouped into ranges and represented by bars.

Bar Chart

A graphical representation of data using bars of different heights or lengths to compare values across categories.

Ratio Scale

A quantitative scale of measurement that has a true zero-point and units of equal intervals, allowing for the comparison of absolute magnitudes of numbers.