Which of the Following Statements Is CORRECT

question 51

Multiple Choice

Which of the following statements is CORRECT?

• A) If the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• B) If the maturity risk premium (MRP)equals zero,the Treasury bond yield curve must be flat.
• C) If inflation is expected to increase in the future and the maturity risk premium (MRP)is greater than zero,the Treasury bond yield curve must be upward sloping.
• D) If the expectations theory holds,the Treasury bond yield curve will never be downward sloping.
• E) Because long-term bonds are riskier than short-term bonds,yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.

---

Definitions:

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States during the Great Depression.

Predecessor

An individual or entity that held a position or office before the current holder.

Election

A formal group decision-making process by which a population chooses an individual or multiple individuals to hold public office.

Critics

Individuals who evaluate or analyze the merits and faults of artistic, literary, or political works.