If the yield curve is downward sloping

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Reference no: EM13911143

If the yield curve is downward sloping, which of the following statements is correct? (hint: graph the yield curves for a T bond, a AAA bond, and a B bond)

a) The yield on the 5-year T-bond must exceed the yield on the 10-year AAA corporate bond.

b) The yield on the 5-year AAA corporate bond must exceed the yield on 5-year B corporate bond.

c) The yield on the 5-year AAA corporate bond must be lower the yield on the 5-year T-bond.

d) The yield on the 5-year T-bond must exceed the yield on the 5-year AAA corporate bond.

e) The yield on the 10-year T-bond must be less than the yield on a 2-year T-bond.

Reference no: EM13911143

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