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:

Rent

The payment made by a tenant to a landlord for the use of a property, building, or land.

Marginal Revenue Product

The increased earnings resulting from the application of one additional production factor, such as workforce or investment.

Additional Revenue

Extra income received by a business or government beyond what was originally forecasted or expected.

Factor of Production

Resources used in the production of goods and services, such as labor, capital, land, and entrepreneurship.