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  3. 2. which of the following statements is correct? a

2. Which of the following statements is CORRECT? a. If the maturity risk premium (MRP)...

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Accounting

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2. Which of the following statements is CORRECT? a. If the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. b. If the maturity risk premium (MRP) equals zero, the Treasury bond yield curve must be flat. e. If inflation is expected to decrease in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be downward sloping d. If the expectations theory holds, the Treasury bond yield curve will never be downward sloping. e. If inflation is expected to increase in the future and the maturity risk premium (MRP) is greater than zero, the Treasury bond yield curve must be upward sloping. 3. Ms Parker found two opportunities of investment A (rate of return 4%, standard deviation 4%) and investment B (rate of return 6%, standard deviation 3%). Which one is better for her? (hints: calculate each CV and then compare each other) a. A b. Bc. none

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