Which of the Following Statements Is CORRECT

question 75

Multiple Choice

Which of the following statements is CORRECT?

• A) Even if the pure expectations theory is correct,there might at times be an inverted Treasury yield curve.
• B) If the yield curve is inverted,short-term bonds have lower yields than long-term bonds.
• C) The higher the maturity risk premium,the higher the probability that the yield curve will be inverted.
• D) Inverted yield curves can exist for Treasury bonds,but because of default premiums,the corporate yield curve cannot become inverted.
• E) The most likely explanation for an inverted yield curve is that investors expect inflation to increase in the future.

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Definitions:

International Trade

The exchange of goods, services, and capital between countries, driven by a desire for economic benefit and efficiency.

Economic Changes

Refers to shifts in the structure, performance, or organization of an economy, including changes in market conditions, regulatory environments, and the distribution of wealth and resources.

CSR

Corporate Social Responsibility; a business model in which companies integrate social and environmental concerns in their operations and interactions with stakeholders.

Corporate Social Responsibility

A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis.