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Consider the following statements that address these factors, and indicate if you think each statement is true or false. Statement All else being equal, the
Consider the following statements that address these factors, and indicate if you think each statement is true or false.
Statement
All else being equal, the more highly that savers and investors prefer immediate spending to deferred consumption, the lower the
compensation that savers and investors will require to induce them to make an investment that will necessitate postponed
spending.
On average and everything else held constant, an investment that can provide a return should attract more investment
capital from saversinvestors than an otherwise identical investment that can generate a return.
A riskfree asset is one characterized by guaranteed returns, whereas the cash flows of a risky asset may be greater or less than
the expected or promised returns.
The longer the period of deferred consumption, the larger will be the maturity premium that savers and investors expect to
receive, everything else held constant.
On average and everything else held constant, year US Treasury bonds should expect to exhibit a smaller maturity premium
than a year US Treasury bill.
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