Which of the Following Statements Is CORRECT

question 4

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium (MRP) is greater than zero, then the yield curve must have an upward slope.
• B) Because long-term bonds are riskier than short-term bonds, yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.
• C) If the maturity risk premium (MRP) equals zero, the yield curve must be flat.
• D) The yield curve can never be downward sloping.
• E) If inflation is expected to increase in the future, and if the maturity risk premium (MRP) is greater than zero, then the yield curve will have an upward slope.

---

Definitions:

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for executive functions, such as judgment, problem-solving, and planning.

Infancy

A developmental period in humans from birth to approximately 24 months of age, characterized by rapid growth and significant milestones in physical, cognitive, and socioemotional development.

Moro Reflex

An involuntary reflex found in infants, involving sudden arm flapping and crying when startled.

Startle Reflex

A sudden involuntary reaction to a surprise or unexpected stimulus, often involving physical movements.