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Please help me with my homework! 1. ou would like to limit your interest rate risk and default risk, but you would still like to
Please help me with my homework!
1. ou would like to limit your interest rate risk and default risk, but you would still like to invest in corporate bonds. Which ofthe possible bonds listed best satisfies your criteria? A. AAA bond with 10 years to maturity B. BBB perpetual bond C. BBB bond with 10 yearsto maturity D. AAA bond with 5 years to maturity E. BBB bond with 5 years to maturity 2. Assume that inflation is expected to steadily decline in the yearsahead, but that the real risk- free rate, r is expected to remain constant. Which of the following statements is most A. if the expectations theory holds,the Treasury yield curve must be downward sloping. B. if the expectations theory holds, the yield curve for corporate securities must be downward sloping c. if there is Maturity Risk Premium, the Treasury yield curve must be upward soping. D. Statements b and care correct. E. All of the statements above are correct. 3. Which of the following statements is most correct? A. Downward sloping yield curves are inconsistent with the expectations theory B. The shape of the yield curve depends only on expectations about future inflation. c. If expectations theory correct. a downward sloping yield curve indicates that interest rates is are expected to decline in the future D. Statements a and care correct. E. None of the above statements are correct. 4. Which of the following statements is most correct? A. if companies have fewer productive opportunities interest rates are likely to increase. B. If individuals increase their savings ra rates are kely to increase. C. If expected inflation increases, interest rates are likely to increase D. All of the above are correct. E. None of the above is correct Step by Step Solution
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