Which of the Following Statements Is CORRECT

question 101

Multiple Choice

Which of the following statements is CORRECT?

• A) if the maturity risk premium (mrp) is greater than zero, then the yield curve must have an upward slope.
• B) 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.
• C) if the maturity risk premium (mrp) equals zero, the yield curve must be flat.
• D) the yield curve can never be downward sloping.
• E) if inflation is expected to increase in the future, and if the maturity risk premium (mrp) is greater than zero, then the yield curve will have an upward slope.

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Definitions:

Butterflies

Insects belonging to the order Lepidoptera, known for their bright colors and large, often patterned wings, undergoing dramatic transformations during their life cycle.

Density-Independent Factor

Environmental factors that affect population sizes regardless of the population's density, such as natural disasters or climate changes.

Flood

An overflow of water that submerges land that is usually dry.

Rabbits

Small mammals with long ears, long hind legs, and a short tail, known for their fast breeding and being common in many regions as wild and domesticated animals.