Assume the following returns and yields: U

Finance Dec 19, 2020

Assume the following returns and yields: U.S. T-bill = 8%, 5-year U.S. T-note = 7%, IBM common stock = 15%, IBM AAA Corporate Bond = 12% and 10-year U.S. T-bond = 6%. Based on this information, the shape of the yield curve is ________.

Select one:

a. upward sloping

b. normal

c. flat

d. downward sloping

Expert Solution

The correct answer is option D) Downward Sloping

t-bill	5 year US T-note	10 year US T-bond
8%	7%	6%

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