The Existence of an Upward-Sloping Yield Curve Suggests That

question 74

Multiple Choice

The existence of an upward-sloping yield curve suggests that:

• A) bonds should be selling at a discount to par value.
• B) bonds will not return as much as common stocks.
• C) interest rates will be increasing in the future.
• D)real interest rates will be increasing soon.

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Definitions:

Long Put Positions

An investment strategy where an investor purchases put options betting that the underlying asset will decrease in value.

Dividend Payout Policy

The policy a company follows in deciding how much it will pay out to shareholders in dividends.

Put

A financial option contract giving the owner the right but not the obligation to sell a specified amount of an underlying asset at a set price within a specified time.

Call

An options contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.