An Investor Facing an Upward-Sloping Yield Curve Buys a Six-Month

Multiple Choice

An investor facing an upward-sloping yield curve buys a six-month Treasury bill with the intent of selling it three months later. This investor __________.

A) Has determined that the six-month Treasury bill is underpriced
B) Has determined that the three-month Treasury bill is underpriced
C) Expects long-term interest rates to rise in the next three months
D) Is riding the yield curve
E) Is reluctant to buy short-term securities, fearing a decline in interest rates