Which of the Following Statements Is CORRECT

question 81

Multiple Choice

Which of the following statements is CORRECT?

• A) If inflation is expected to increase in the future,and if the maturity risk premium (MRP)is greater than zero,then the Treasury yield curve will have an upward slope.
• B) If the maturity risk premium (MRP)is greater than zero,then the yield curve must have an upward slope.
• C) 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.
• D) If the maturity risk premium (MRP)equals zero,the yield curve must be flat.
• E) The yield curve can never be downward sloping.

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Definitions:

Variable Manufacturing Costs

Charges that fluctuate based on the volume of production, like components used in product assembly and wages for workers on the production line.

Variable Selling Expenses

Selling costs that fluctuate with sales volume, such as commissions for sales staff.

Break-Even Sales

The amount of revenue required to cover all fixed and variable expenses, resulting in zero profit.

Variable Expenses

Expenses that vary directly with the level of production or sales, such as raw materials and direct labor costs.