Which of the Following Statements Is CORRECT

question 51

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• B) If the maturity risk premium (MRP)equals zero,the Treasury bond yield curve must be flat.
• C) If inflation is expected to increase in the future and the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• D) If the expectations theory holds,the Treasury bond yield curve will never be downward sloping.
• E) Because long-term bonds are riskier than short-term bonds,yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.

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Definitions:

Combining Form

A word element used to link parts of words together in medical terminology.

Nerve

A group of nervous tissues bound together for the purpose of conducting nervous impulses.

Combining Form

In linguistics and lexicology, a form of a word that combines with another form to create a new word or term, often used in the creation of technical or medical terms.

Egg

An organic vessel containing the zygote in which an embryo develops until it can survive on its own; also, a common food item rich in protein.