Which of the Following Statements Is CORRECT

question 20

Multiple Choice

Which of the following statements is CORRECT?

• A) The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
• B) The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond.
• C) The yield on a 3-year Treasury bond should always exceed the yield on a 2-year Treasury bond.
• D) If inflation is expected to increase,then the yield on a 2-year bond should exceed that on a 3-year bond.
• E) The real risk-free rate should increase if people expect inflation to increase.

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Definitions:

Integrated Set

A collection of elements or principles that are combined in a way that they work together effectively.

Ideology

A systematically interrelated set of beliefs whose primary function is explanation. It circumscribes thinking, making it difficult for the holder to escape from its mould.

Paradigm

A distinct set of concepts or thought patterns, including theories, research methods, postulates, and standards for what constitutes legitimate contributions to a field.

Acquiescent Response Set

Tendency to agree with items in an attitude questionnaire. This leads to an ambiguity in interpretation if a high score on an attitude questionnaire can be obtained only by agreeing with all or most items.