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?

Question

Quizplus · Accepted Answer

Given that the yield curve for Treasuries is downward sloping and there's no liquidity or maturity risk premium, a five-year corporate bond must have a higher yield than a 30-year Treasury bond. This is because corporate bonds typically have higher yields than Treasury bonds due to the additional default risk, and a downward sloping yield curve indicates that longer-term Treasury bonds have lower yields than shorter-term ones.

The Wall Street Journal States That the Yield Curve for Treasuries