Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) The yield on a 3-year Treasury bond cannot exceed the yield on a 10-year Treasury bond.
• B) The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
• C) The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond.
• D) The yield on a 10-year AAA-rated corporate bond should always exceed the yield on a 5-year AAA-rated corporate bond.
• E) The following represents a "possibly reasonable" formula for the maturity risk premium on bonds: MRP = -0.1%(t),where t is the years to maturity.

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Definitions:

Game Theory

A branch of mathematics and economics that analyzes strategies in competitive situations where the outcome depends on the actions of all participants.

International Cartel

A consortium of independent organizations formed to limit competition and control prices in international markets.

OPEC

The Organization of Petroleum Exporting Countries, a consortium of countries that coordinates and unifies the petroleum policies of its member countries to secure fair and stable prices for petroleum producers.

OPEC

The Organization of the Petroleum Exporting Countries is an intergovernmental organization of 13 oil-producing countries that coordinates and unifies petroleum policies among member countries.