Which of the Following Statements Is CORRECT

question 48

Multiple Choice

Which of the following statements is CORRECT?

• A) The higher the maturity risk premium,the higher the probability that the yield curve will be inverted.
• B) The most likely explanation for an inverted yield curve is that investors expect inflation to increase.
• C) The most likely explanation for an inverted yield curve is that investors expect inflation to decrease.
• D) If the yield curve is inverted,short-term bonds have lower yields than long-term bonds.
• E) Inverted yield curves can exist for Treasury bonds,but because of default premiums,the corporate yield curve can never be inverted.

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Definitions:

Population Mean

The average value of a population's characteristics, calculated by summing all individual values and dividing by the number of individuals.

Confidence Level

The probability that a parameter lies within a specified range of values, often used in interval estimation to convey the reliability of an estimate.

Assignable Cause

An identifiable factor that causes a change or variation in a process or system, distinguishable from random variation.

Variation

The degree to which data points in a dataset differ from each other and from the mean, indicating the dispersion within the dataset.