Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A)The yield curve relates time to maturity to interest rates on zero coupon bonds.
• B)The yield curve is based on Treasury bill yields.
• C)The term structure of interest rates is based on default-free, pure discount securities.
• D)The term structure of interest rates is based on default-free, coupon bonds.
• E)The yield curve ignores default risk while the term structure includes a default risk premium.

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Definitions:

Saturated Zone

The layer of an aquifer in which all the pores and rock fractures are filled with water.

Water Table

The level below which the ground is saturated with water.

Permeability

The capacity of a material or membrane to allow liquids or gases to pass through it, often used in reference to soil or rock.

Seal Fractures

The process of closing or repairing cracks in geological formations, often to prevent fluid migration.