Which of the Following Statements Is True

question 51

Multiple Choice

Which of the following statements is true?

• A) The longer the maturity of a security, the greater its interest rate risk.
• B) If investors believe inflation will be subsiding in the future, the prevailing yield curve will have a positive slope .
• C) The real rate of interest varies with the business cycle, with the lowest rates at the end of a period of business expansion and the highest at the bottom of a recession.
• D) The interest rate risk premium always adds a downward bias to the slope of the yield curve.

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Definitions:

Security Funds

Financial reserves set aside to cover potential losses or liabilities, often used in contexts such as investments, insurance, and real estate.

Stop-Payment Order

An order by a bank customer to his or her bank not to pay or certify a certain check.

Subsequent Checks

Checks issued or actions taken following the initial or primary ones, typically as part of a series or sequence.

Drawer's Account

Refers to the bank account from which a check is drawn or payable.