Which of the Following Statements Is CORRECT

question 42

Multiple Choice

Which of the following statements is CORRECT?

• A) Liquidity premiums are generally higher on Treasury than corporate bonds.
• B) The maturity premiums embedded in the interest rates on U.S.Treasury securities are due primarily to the fact that the probability of default is higher on long-term bonds than on short-term bonds.
• C) Default risk premiums are generally lower on corporate than on Treasury bonds.
• D) Reinvestment rate risk is lower, other things held constant, on long-term than on short-term bonds.
• E) If the maturity risk premium were zero and interest rates were expected to decrease in the future, then the yield curve for U.S.Treasury securities would, other things held constant, have an upward slope.

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Definitions:

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A psychological theory suggesting that individuals can maintain their sense of self-integrity by telling themselves (affirming) positive truths about themselves.

Stereotype Threat

The anxiety or concern experienced when one fears being judged or treated unfairly based on negative stereotypes about their group.

Stigmatized Group

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Diagnostic Measure

An assessment tool or test used to identify and understand the presence, absence, or extent of a condition, disorder, or characteristic in an individual.