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Assume that inflation is expected to decline steadily in the future, but that the real risk-free rate, r*, will remain constant. Which of the following statements is CORRECT, other things held constant?
a. If inflation is expected to decline, there can be no maturity risk premium.
b. If there is a positive maturity risk premium, the Treasury yield curve must be upward sloping.
c. The expectations theory cannot hold if inflation is decreasing.
d. If the pure expectations theory holds, the corporate yield curve must be downward sloping.
e. If the pure expectations theory holds, the Treasury yield curve must be downward sloping
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Which of the following statements is true of the rule of 72?
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A(n) ____ will increase the market value of a call option.
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You purchased a zero coupon bond one year ago for $173.85. The market interest rate is now 9 percent. If the bond had 20 years to maturity when you originally purchased it, what was your total return for the past year? Assume semiannual compounding. ..
How many pounds each of peanuts and cashews should be used to make 100 pounds of the mix?
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