Which of the Following Statements Is True

question 34

Multiple Choice

Which of the following statements is true?

• A) Downward sloping yield curves typically appear in the early to mid-period of a business expansion.
• B) Interest rate risk premium always adds an upward bias to the slope of the yield curve.
• C) If investors believe that inflation will be increasing in the near future, the yield curve will be downward sloping.
• D) Downward-sloping yield curve is the yield curve most commonly observed.

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Definitions:

Risk-Free Rate

The theoretical return on an investment with zero risk, typically associated with government bonds or treasury bills, serving as a benchmark for judging investment performance.

U.S. GAAP

United States Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the U.S. to compile financial statements.

Accumulated Depreciation

The complete portion of a physical asset's initial cost that has been charged off as depreciation expense from the time the asset became operational.

Historical Cost

The original monetary value of an asset as it appears in the financial records, not adjusted for inflation or changes in value.