Which of the Following Statements Is True

question 13

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 will be upward sloping.
• C) The real rate of interest varies with the business cycle, with the lowest rates seen 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:

Parasympathetic

Relating to the part of the autonomic nervous system that conserves energy as it slows the heart rate, increases intestinal and gland activity, and relaxes sphincter muscles.

Sympathetic

Pertaining to the part of the autonomic nervous system that typically prepares the body for intense physical activity.

Parasympathetic

The part of the autonomic nervous system responsible for conserving energy as it slows the heart rate, increases intestinal and gland activity, and relaxes sphincter muscles in the gastrointestinal tract.

Sympathetic

Pertaining to the part of the autonomic nervous system that prepares the body for action and stress responses.