Which of the Following Statements Is CORRECT

question 76

Multiple Choice

Which of the following statements is CORRECT?

• A) Downward sloping yield curves are inconsistent with the expectations theory.
• B) The actual shape of the yield curve depends only on expectations about future inflation.
• C) If the pure expectations theory is correct,a downward sloping yield curve indicates that interest rates are expected to decline in the future.
• D) If the yield curve is upward sloping,the maturity risk premium must be positive and the inflation rate must be zero.
• E) Yield curves must be either upward or downward sloping - they cannot first rise and then decline.

---

Definitions:

Adaptive Behaviors

Behaviors that are learned or modified in response to changes in environment, allowing an individual or species to survive and reproduce.

Survival

The act of continuing to live or exist, especially in spite of challenging conditions or threats.

Reproduction

The biological process by which new individual organisms are produced from their parents.

Drive

An internal motivational state created by physiological or psychological needs, compelling an individual towards specific behaviors or goal attainment.