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Business, 13.03.2020 21:30 yukichaniscool8

Inflation is expected to increase steadily over the next 10 years, there is a positive maturity risk premium on both Treasury and corporate bonds, and the real risk-free rate of interest is expected to remain constant. Which of the following statements is CORRECT?a. The yield on 7-year corporate bonds must exceed the yield on 10-year Treasury bonds. b. The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope. c. The yield on 10-year Treasury securities must exceed the yield on 7-year Treasury securities d. The stated conditions cannot all be true they are internally inconsistent. e. The yield on any corporate bond must exceed the yields on all Treasury ; bonds.

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Inflation is expected to increase steadily over the next 10 years, there is a positive maturity risk...
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