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A one-year bond offers a 12.5% yield to maturity and a two-year bond offers an 11% yield to maturity. Which of the following is true?

A one-year bond offers a 12.5% yield to maturity and a two-year bond offers an 11% yield to maturity. Which of the following is true?

Select one:

a.

The term structure is flat.

b.

The term structure is downward sloping.

c.

The term structure is upward sloping.

d.

The term structure cannot be determined.

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