Which of the following statements is CORRECT? Question 10 options: a) Downward-s

ID: 2739914 • Letter: W

Question

Which of the following statements is CORRECT? Question 10 options:

a) Downward-sloping yield curves are inconsistent with the expectations theory.

b) The actual shape of the yield curve depends only on expectations about future inflation.

c) If the pure expectations theory is correct, a downward-sloping yield curve indicates that interest rates are expected to decline in the future.

d) If the yield curve is upward sloping, the maturity risk premium must be positive and the inflation rate must be zero.

e) Yield curves must be either upward or downward sloping—they cannot first rise and then decline.

The asnwer is option b.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.