Question $5$

Short Corp just issued bonds that will mature in $10$ years, and Long Corp issued bonds that will mature in $20$ years. Both bonds

promise to pay a semiannual coupon, they are not callable or convertible, and they are equally liquid. Further assume that the

Treasury yield curve is based only on the pure expectations theory. Under these conditions, which of the following statements is

$.$CORRECT?

B$.$ If the Treasury yield curve is downward sloping. Long's bonds must under all conditions have the lower yield.

D$.$ If the yield curve for Treasury securities is upward sloping. Long's bonds must under alf conditions have a higher yield than Short's bonds.

C$.$ If the yield curve for Treasury securities is flat, Short's bond must under all conditions have the same yield as Long's bonds.

A$.$ If the Treasury yield curve is upward sloping and Short has less default risk than Long, then Short's bonds must under all conditions have a

lower yield than Long's bonds.

E$.$ If Long's and Short's bonds have the same default risk, their yields must under all conditions be equal.