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

---

Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in the net income or loss for that period.

Periodic Inventory System

An inventory system where inventory levels and cost of goods sold (COGS) are updated in the accounting records at the end of an accounting period.

Cost of Goods Sold

The total cost directly related to the production of the goods sold by a company.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit or loss over a specific period.