Which of the Following Statements Is CORRECT

question 49

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium were zero and interest rates were expected to decrease in the future,then the yield curve for U.S.Treasury securities would,other things held constant,have an upward slope.
• B) Liquidity premiums are generally higher on Treasury than corporate bonds.
• C) The maturity premiums embedded in the interest rates on U.S.Treasury securities are due primarily to the fact that the probability of default is higher on long-term bonds than on short-term bonds.
• D) Default risk premiums are generally lower on corporate than on Treasury bonds.
• E) Reinvestment risk is lower,other things held constant,on long-term than on short-term bonds.

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Definitions:

Doggerel

Doggerel denotes poorly written verse, often characterized by its triviality or nonsensical content.

Paasche Price Index

A price index that measures the change in the purchasing power of a basket of goods and services, using the current period consumption pattern as the weight.

Doggerel

Verse or words that are clumsily formed or expressed, often lacking in artistic value.

Paasche Price Index

An economic measure that calculates the change in the cost of purchasing a specific basket of goods and services in a given year compared to a base year, using the current year's prices.