If the treasury yield curve is downward sloping how should, Ask an Expert

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If the Treasury yield curve is downward sloping, how should the yield to maturity on a 10-year Treasury coupon bond compare to that on a 1-year T-bill?

a. The yield on a 10-year bond would be less than that on a 1-year bill.

b. 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.

c. It is impossible to tell without knowing the relative risks of the two securities.

d. The yields on the two securities would be equal.

e. It is impossible to tell without knowing the coupon rates of the bonds.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M979353

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