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:

Just World Phenomenon

The cognitive bias that a person's actions always bring morally fair and fitting consequences to that person.

Kin Selection

A strategy in evolution where an organism's focus is on enhancing the reproductive prospects of its relatives, even if it results in a compromise to its own survival and ability to reproduce.

Social Exchange

Social exchange is a theory that suggests human relationships are formed based on a subjective cost-benefit analysis and the comparison of alternatives.

Diffusion of Responsibility

The phenomenon where individuals in a group are less likely to take action or feel accountable because responsibility is shared among all members.