12.

You find that both the US and ECB treasury yield curves are backwardated. This is suggestive that: O a. The no-arbitrage equilibrium mechanism is failing b. There may be a flight of capital to safe haven investments c. There is an trade imbalance between Europe and the USA d. The US and European economies may be headed for recession Oe. The yields of short term instruments are higher, after controlling for risk, than the yields of long horizon instruments Df. The economy is growing steadily as one would hope