Which of the following statements is CORRECT?
A. The most likely explanation for an inverted yield curve is that investors expect inflation to increase.
B. The most likely explanation for an inverted yield curve is that investors expect inflation to decrease.
C. If the yield curve is inverted, short-term bonds have lower yields than long-term bonds.
D. Inverted yield curves can exist for Treasury bonds, but because of default premiums, the corporate yield curve can never be inverted.
E. The higher the maturity risk premium, the higher the probability that the yield curve will be inverted.
Answer: B
You might also like to view...
Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?
A. A 1-year bond with a 15% coupon. B. A 3-year bond with a 10% coupon. C. A 10-year zero coupon bond. D. A 10-year bond with a 10% coupon. E. An 8-year bond with a 9% coupon.
If technology changes rapidly, a firm should:
A) depreciate plant assets using the same method used for its tax returns. B) depreciate plant assets over long periods of time. C) consider an accelerated rate of depreciation. D) use the straight-line method of depreciation as it is the easiest.
An important function of the World Trade Organization is to lower trade barriers
Indicate whether the statement is true or false
If we want to perform a two-tail test of a population proportion p, we can only use the z-test of p
Indicate whether the statement is true or false