Multiple Choice
Which of the following statements is CORRECT?
A) The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.
B) The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond.
C) The yield on a 3-year Treasury bond should always exceed the yield on a 2-year Treasury bond.
D) If inflation is expected to increase,then the yield on a 2-year bond should exceed that on a 3-year bond.
E) The real risk-free rate should increase if people expect inflation to increase.
Correct Answer:
Verified
Correct Answer:
Verified
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