Assume that yields on U.S. Treasury securities were as follows: a. Select a correct yield curve based on these data. The correct yield curve is -Select- . b. What twoe of vield curve is shown? -select- c The yield curve is abnormal. The yield curve is inverted. 1. Even unuugn une vurruwer reinvests in increasing short-term rates, those rates are still below the long-term rate, but what makes the higher long-term rate attractive is the rollover risk that may possibly occur if the short-term rates go even higher than the long-term rate (and that could be for a long time!). II. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be higher. III. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be lower. IV. Generally, it would make sense to borrow long-term because each year the loan is renewed the interest rate would be lower. The correct yield curve is b. What type of yield curve is shown? c. What information does this araph tell vou? -Select- d In general, the rate of inflation is expected to increase and the maturity risk premium is less than zero. In general, the rate of inflation is expected to decrease and the maturity risk premium is less than zero. In general, the rate of inflation is expected to increase and the maturity risk premium is greater than zero. The shape of the yield curve depends only on expectations about future inflation, which is expected to increase. In general, the rate of inflation is expected to decrease and the maturity risk premium is greater than zero. Assume that yields on U.S. Treasury securities were as follows: a. Select a correct yield curve based on these data. The correct yield curve is -Select- . b. What twoe of vield curve is shown? -select- c The yield curve is abnormal. The yield curve is inverted. 1. Even unuugn une vurruwer reinvests in increasing short-term rates, those rates are still below the long-term rate, but what makes the higher long-term rate attractive is the rollover risk that may possibly occur if the short-term rates go even higher than the long-term rate (and that could be for a long time!). II. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be higher. III. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be lower. IV. Generally, it would make sense to borrow long-term because each year the loan is renewed the interest rate would be lower. The correct yield curve is b. What type of yield curve is shown? c. What information does this araph tell vou? -Select- d In general, the rate of inflation is expected to increase and the maturity risk premium is less than zero. In general, the rate of inflation is expected to decrease and the maturity risk premium is less than zero. In general, the rate of inflation is expected to increase and the maturity risk premium is greater than zero. The shape of the yield curve depends only on expectations about future inflation, which is expected to increase. In general, the rate of inflation is expected to decrease and the maturity risk premium is greater than zero
