When the Yield Curve Is Upward-Sloping,then

question 16

Multiple Choice

When the yield curve is upward-sloping,then:

• A) short-maturity bonds offer the highest coupon rates.
• B) long-maturity bonds are priced above par value.
• C) short-maturity bonds yield less than long-maturity bonds.
• D) long-maturity bonds increase in price when interest rates increase.

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Definitions:

Fractions

Mathematical expressions representing parts of a whole or a ratio between two quantities.

Mixed Numbers

Numbers consisting of an integer and a fraction, representing quantities greater than one.

Lowest Terms

Refers to a fraction simplified to its smallest possible numerator and denominator without changing its value.

Improper Fractions

Fractions where the numerator (top number) is greater than or equal to the denominator (bottom number), resulting in a value greater than or equal to one.