The Wall Street Journal states that the yield curve for Treasuries is downward sloping and there is no liquidity premium or maturity risk premium. Given this information, which of the following statements is correct?
A) A 30-year corporate bond must have a higher yield than a five-year corporate bond.
B) A five-year corporate bond must have a higher yield than a 30-year Treasury bond.
C) A five-year Treasury bond must have a higher yield than a five-year corporate bond.
D) All of these statements are correct.
Correct Answer:
Verified
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