Which of the Following Statements Is Correct

question 14

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 government securities would, other things held constant, have an upward slope.
• B)Liquidity premiums are generally higher on government than corporate bonds.
• C)Default risk premiums are generally lower on corporate than on government bonds.
• D)Reinvestment rate risk is lower, other things held constant, on long-term than on short-term bonds.

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