Which of the Following Statements Is CORRECT

question 38

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 real risk-free rate is higher for corporate than for Treasury bonds.
• C) Most evidence suggests that the maturity risk premium is zero.
• D) Liquidity premiums are higher for Treasury than for corporate bonds.
• E) The pure expectations theory states that the maturity risk premium for long-term Treasury bonds is zero and that differences in interest rates across different Treasury maturities are driven by expectations about future interest rates.

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Definitions:

Rating Scale

A system for quantitatively measuring or assessing a person's attitudes, feelings, or behaviors.

Theme

The underlying subject or repeated idea that is central to a piece of literature, art, or discussion.

Anchored

Contextually tied or fixed to a particular point of reference or standard, often used in assessment, measurement, or in qualitative research to provide stability or calibration.

Halo Effect

Error that occurs when the overall impression of an individual clouds the rating of that person in one or more select areas.