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Which of the following is correct? A. The maturity premiums embedded in the interest rates on us treasury securities are due primarily to the fact
Which of the following is correct?
A. The maturity premiums embedded in the interest rates on us treasury securities are due primarily to the fact that the probability of default is lower on long-term bonds than on short-term goals.
B. If the maturity risk premium were zero and the rate of inflation were expected to increase in the future, then the yield curve for us treasurt securities would, other things held constant, have an upward slope.
C. According to the market segmentation theory of the term structure of interest rates, we should normally expect the yield curve to have an upward slope.
D. The expectations theory of the term structure of interest rates that the borrowers generally prefer to borrow on a long term basis while saves generally prefer to lend on a short term basis, and that as result the yield curve is normally upward sloping.
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