Quiz Ch 06 – T/F Understanding the Yield Curve
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: The ‘yield curve’ illustrates the connection between bonds’ maturities and their corresponding yields.
True or false: The ‘yield curve’ illustrates the connection between bonds’ maturities and their corresponding yields.
True or false: Yield curves result from combining the genuine risk-free rate with the projected inflation rate. A single curve is applicable to corporate and Treasury securities.
True or false: In the scenario of a downward-sloping Treasury yield curve, the yield to maturity for a 10-year Treasury coupon bond would surpass that of a 1-year T-bill.
True or false: Considering the usual positive maturity risk premium, the yield curve generally displays an upward slope. If a measured yield curve appears downward, it may indicate measurement error.
True or false: Given the positive nature of the maturity risk premium, the yield curve generally tends to slope upwards.
True or false: A yield curve that slopes upward is commonly known as ‘normal,’ while a downward-sloping yield curve is considered ‘abnormal’.
Asks to classify each as continuous or discrete