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.

---

Definitions:

Perception

The way in which a person views the world.

Equal Employment Opportunity Commission

A U.S. federal agency that enforces laws against workplace discrimination.

Civil Rights Act

A landmark piece of legislation in the United States that outlaws discrimination based on race, color, religion, sex, or national origin.

U.S. Merit System Protection Board

A federal agency that protects public employees against abuses by government management, ensuring adherence to the merit system principles.