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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Definitions:

Perspective

An attitude towards or way of regarding something; a point of view.

Imagine

The ability to form new ideas, images, or concepts not present to the senses or to think creatively about something.

Someone Else's

Pertaining to or belonging to another person.

Competitive

Characterized by or involving competition; having a strong desire to win or be the best at something.