T3

If the Treasury yield curve is flat, how should the yield to maturity on a 10-year Treasury coupon bond compare to that on a 1-year T-bill? It is impossible to tell without knowing the coupon rates of the bonds. The yield on a 10-year bond would be less than that on a 1-year bill. It is impossible to tell without knowing the relative risks of the two securities. The yields on the two securities would be equal. The yield on a 10-year bond would have to be higher than that on a 1-year bill because of the maturity risk premium