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If the yield curve is downward sloping, what is the yield to maturity on a 10-year Treasury coupon bond, relative to that on a 1-year
If the yield curve is downward sloping, what is the yield to maturity on a 10-year Treasury coupon bond, relative to that on a 1-year T-bond? and why?
. | The yield on the 10-year bond is less than the yield on a 1-year bond | |
| The yield on a 10-year bond will always be higher than the yield on a 1-year bond because of maturity premiums. | |
It is impossible to tell without knowing the coupon rates of the bonds. | ||
The yields on the two bonds are equal. | ||
It is impossible to tell without knowing the relative risks of the two bonds |
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