Under a Normal Upward Sloping Yield Curve Scenario,fifteen Year Fixed-Rate

question 23

Multiple Choice

Under a normal upward sloping yield curve scenario,fifteen year fixed-rate mortgages should be priced _________ thirty-year fixed-rate mortgages.

• A) equal to
• B) less than
• C) greater than
• D) there is no relationship to the yield curve

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefits received by all participants.

Good

A material item or service that fulfills wants or needs, often exchanged in economic transactions.

Equilibrium Price

The market price at which the quantity of a good or service demanded equals the quantity supplied.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.