Which of the Following Statements Is CORRECT

question 49

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium were zero and interest rates were expected to decrease in the future,then the yield curve for U.S.Treasury securities would,other things held constant,have an upward slope.
• B) Liquidity premiums are generally higher on Treasury than corporate bonds.
• C) The maturity premiums embedded in the interest rates on U.S.Treasury securities are due primarily to the fact that the probability of default is higher on long-term bonds than on short-term bonds.
• D) Default risk premiums are generally lower on corporate than on Treasury bonds.
• E) Reinvestment risk is lower,other things held constant,on long-term than on short-term bonds.

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Definitions:

Power Distance

The extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally.

Inequality

Refers to an uneven distribution of resources, opportunities, and rights among individuals or groups, leading to disparities in wealth, health, and social status.

Character Theories

Theories related to the study of personality that focus on the moral and ethical qualities of individuals.

Natural Liberty

The concept of freedom from artificial or man-made restrictions, promoting the idea of living in accordance with natural laws.