Which of the Following Statements Is Correct Concerning the Term

question 111

Multiple Choice

Which of the following statements is correct concerning the term structure of interest rates?
I.Expectations of lower inflation rates in the future tend to lower the slope of the term structure of interest rates.
II.The term structure of interest rates includes both an inflation premium and an interest rate risk premium.
III.The real rate of return has minimal,if any,affect on the slope of the term structure of interest rates.
IV.The term structure of interest rates and the time to maturity are always directly related.

• A)I and II only
• B)II and IV only
• C)I, II, and III only
• D)II, III, and IV only
• E)I, II, and IV only

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