The Term Structure of Interest Rates May Be Downward Sloping

Multiple Choice

The term structure of interest rates may be downward sloping if:

A) The interest rate risk premium is the same for both short and long-term bonds.
B) The inflation premium decreases with maturity.
C) The real rate of interest is lower this year than it was last year.
D) Default risk premiums are higher for longer term bonds than for shorter term bonds.
E) There are bonds that have an unfavourable tax status.