Question
Interest rates are currently at their lowest historical levels. It is expected the interest rates will increase in the future. In particular, your expectation is
Interest rates are currently at their lowest historical levels. It is expected the interest rates will increase in the future. In particular, your expectation is that the yield curve is upward sloping. Given this condition, you expect that.
a) short-maturity bond's yield to maturity are higher than long-maturity bond's yield to maturity.
b) short maturity bond's yields-to-maturity are about the same as long-maturity bond's yield to maturity
c) Long maturity bonds are priced above par value
d) short-maturity bond's yield to maturity are less than long-maturity bond's yield to maturity.
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