Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) The yield on a 3-year Treasury bond cannot exceed the yield on a 10-year Treasury bond.
• B) The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
• C) The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond.
• D) The yield on a 10-year AAA-rated corporate bond should always exceed the yield on a 5-year AAA-rated corporate bond.
• E) The following represents a "possibly reasonable" formula for the maturity risk premium on bonds: MRP = -0.1%(t),where t is the years to maturity.

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Definitions:

New Buy

Refers to a purchasing situation where a buyer acquires a product or service for the first time, involving more research and decision-making effort.

Buying Center Culture

The set of behaviors, beliefs, and values that influence how a company's purchasing decisions are made.

Consensus

Agreement achieved by a group as a whole, where all members support the decision even if it is not their first choice.

Modified Rebuy

A purchasing situation in which a company buys goods that have been previously purchased but requires some modification or change to specifications, suppliers, or terms.