Which of the Following Statements Is Correct

question 52

Multiple Choice

Which of the following statements is correct?

• A)A flat yield curve occurs when the yield-to-maturity is virtually unaffected by the term-to-maturity.
• B)Real interest rates are generally lower than nominal interest rates.
• C)Liquidity risk is the risk that a security may be difficult to sell on short notice for its true value.
• D)All of these statements are correct.

---

Definitions:

Rate of Return

Variation in the worth of an investment over a specific interval, depicted as a percentage of the investment's initial outlay.

Discount Rate

The interest rate used to discount future cash flows to their present values.

Present Value

The current financial assessment of a sum of money in the future or ongoing cash flows, based on a specific rate of return.

Cash Flows

The movement of money into and out of a business, project, or financial product.