Which of the following bonds are considered to be default-risk free?
A) municipal bonds
B) investment-grade bonds
C) U.S. Treasury bonds
D) junk bonds
Answer: C
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MB Chapter 6
- If investors expect interest rates to fall significantly in the future, the yield curve will be inverted. This means that the yield curve has a ________ slope.
- When short-term interest rates are expected to fall sharply in the future, the yield curve will
- An inverted yield curve predicts that short-term interest rates
- The inverted U-shaped yield curve in the figure above indicates that the inflation rate is expected to
- The inverted U-shaped yield curve in the figure above indicates that short-term interest rates are expected to
- The U-shaped yield curve in the figure above indicates that the inflation rate is expected to
- The U-shaped yield curve in the figure above indicates that short-term interest rates are expected to
- The steeply upward sloping yield curve in the figure above indicates that ________ interest rates are expected to ________ in the future.
- The steeply upward sloping yield curve in the figure above indicates that
- Economists' attempts to explain the term structure of interest rates
- According to the liquidity premium theory, a yield curve that is flat means that
- Particularly attractive feature of the ________ is that it tells you what the market is predicting about future short-term interest rates by just looking at the slope of the yield curve.
- The ________ of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and demand conditions for that bond.
- According to this theory of the term structure, bonds of different maturities are not substitutes for one another.
- In actual practice, short-term interest rates and long-term interest rates usually move together; this is the major shortcoming of the
- The ________ of the term structure of interest rates states that the interest rate on a long -term bond will equal the average of short-term interest rates that individuals expect to occur over the life of the long-term bond, and investors have no preference for short-term bonds relative to long-term bonds.
- The expectations theory and the segmented markets theory do not explain the facts very well, but they provide the groundwork for the most widely accepted theory of the term structure of interest rates,
- The preferred habitat theory of the term structure is closely related to the
- According to the liquidity premium theory of the term structure, a downward sloping yield curve indicates that short-term interest rates are expected to
- According to the liquidity premium theory of the term structure, a flat yield curve indicates that short-term interest rates are expected to
- According to the liquidity premium theory of the term structure, a slightly upward sloping yield curve indicates that short-term interest rates are expected to
- According to the liquidity premium theory of the term structure, a steeply upward sloping yield curve indicates that short-term interest rates are expected to
- If the yield curve has a mild upward slope, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
- If the yield curve slope is flat, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
- If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting.If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting.
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.