The Term Structure of Interest Rates Is Upward Sloping for All

question 42

Multiple Choice

The term structure of interest rates is upward sloping for all bond types. A certain AAA rated non-callable 10-year corporate bond has been issued at a 6.15 percent promised yield. Which one of the following bonds probably has a higher promised yield?

• A)A similar quality municipal bond.
• B)A non-callable AAA rated corporate bond with a five-year maturity.
• C)A callable AAA rated corporate bond with a 15-year maturity.
• D)A non-callable AAA rated convertible corporate bond with a 10-year maturity.
• E)All of the options would have a higher promised yield.

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