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Which of the following statements is correct? If inflation is expected to increase in the future and the maturity risk premium is greater than zero,
Which of the following statements is correct?
If inflation is expected to increase in the future and the maturity risk premium is greater than zero, the Treasury bond yield curve must be upward sloping.
If the maturity risk premium is greater than zero, the Treasury bond yield curve must be upward sloping.
Because long-term bonds are riskier than short-term bonds, yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.
If the maturity risk premium equals zero, the Treasury bond yield curve must be flat.
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