Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A)The yield curve relates time to maturity to interest rates on zero coupon bonds.
• B)The yield curve is based on Treasury bill yields.
• C)The term structure of interest rates is based on default-free, pure discount securities.
• D)The term structure of interest rates is based on default-free, coupon bonds.
• E)The yield curve ignores default risk while the term structure includes a default risk premium.

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Definitions:

Unexpected Changes

Unexpected changes refer to unforeseen events or shifts in the marketplace, economies, or natural environment that can significantly impact businesses, economies, and societies.

Price Indexes

Statistical measures that track changes in the price level of a basket of goods and services over a period of time.

Nominal GDP

The total market value of all final goods and services produced within a country in a given period, measured using current prices without adjustment for inflation.

Real GDP

The measure of a nation's total economic output adjusted for price changes and inflation, representing the actual value of goods and services.