If the Yield Curve Is Downward Sloping,what Is the Yield

question 30

Multiple Choice

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 1-year T-bond?

• A) The yield on the 10-year bond is less than the yield on a 1-year bond.
• B) The yield on a 10-year bond will always be higher than the yield on a 1-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:

Applied Science

A discipline that applies existing scientific knowledge to develop more practical applications, including technology or inventions, within fields such as engineering and medicine.

Engineering Research

Systematic, innovative investigation conducted to increase understanding of complex products or processes, aiming at developing new knowledge or technology.

Technological Advances

Innovations and improvements in technology that enable new products, improved processes, and greater efficiency across various industries and sectors.

Savings Rate

The percentage of money that individuals or entities save from their disposable income, often considered an indicator of economic health.