Multiple Choice
Which of the following statements is CORRECT?
A) The yield on a 3-year Treasury bond cannot exceed the yield on a 10-year Treasury bond.
B) The real risk-free rate is higher for corporate than for Treasury bonds.
C) Most evidence suggests that the maturity risk premium is zero.
D) Liquidity premiums are higher for Treasury than for corporate bonds.
E) The pure expectations theory states that the maturity risk premium for long-term Treasury bonds is zero and that differences in interest rates across different Treasury maturities are driven by expectations about future interest rates.
Correct Answer:
Verified
Correct Answer:
Verified
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