Everything Else the Same, If the Yield Curve Is Downward

question 9

Multiple Choice

Everything else the same, if the yield curve is downward sloping, what is the yield to maturity on a 10-year Treasury coupon bond, relative to that on a one-year Treasury bond (T-bond) ?

• A)The yield on the 10-year bond is less than the yield on a one-year bond.
• B)The yield on a 10-year bond will always be higher than the yield on a one-year bond because of maturity premiums.
• C)It is impossible to tell without knowing the coupon rates of the bonds.
• D)The yields on the two bonds are equal.
• E)It is impossible to tell without knowing the relative risks of the two bonds.

---

Definitions:

Response Rates

The percentage of people who reply or respond to a particular call-to-action in marketing research, advertising, or promotional activities.

Anonymity

The state of being anonymous, where an individual's identity is not known or disclosed.

Quantitative Research

Research involving structured forms of data collection such as surveys, which quantifies attitudes, opinions, or behaviors.

Experimental

Pertaining to a method of research in which variables are manipulated to observe their effects on other variables, typically aiming to establish cause-and-effect relationships.