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Which of the following statements is correct? Group of answer choices If different markets existed for long-term and short-term bonds, but lenders and borrowers could
Which of the following statements is correct? Group of answer choices If different markets existed for long-term and short-term bonds, but lenders and borrowers could move freely between markets, (1) the market segmentation theory could not really be an important determinant of the yield curve, and (2) maturity risk premiums could not be significant. Because the default risk premium (DRP) and the liquidity premium (LP) are both essentially zero for U.S. Treasury securities, the Treasury yield curve is influenced more heavily by expected inflation than corporate bonds' yield curves, i.e., we can be sure that a given amount of expected inflation will have more effect on the slope of the Treasury yield curve than on the corporate yield
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