okmarks People Window Help xAplia Student Questionx llcourse

okmarks People Window Help xAplia: Student Questionx llcourses.aplia.com/af/servlet/quiz?quiz action takeQuiz&quiz.pro; action-takeQuiz&quiz.probGuidaONAPCOA8010100000041ca2610090008ct; Graded Assignment Read Chapter 61Back to Assignment Due Sunday 06.17.18 at 1145 PM Attempts: Keep the Highest:/8 6. Factors that impact the yield curve As Aa There are three factors that can affect the shape of the Treasury yield curve (o, IPt, and MRP) and five factors that can affect the shape of the corporate yield curve (,IPt, MRPt DRP, and LPe). The yield curve reflects the aggregation of the impacts from these factors. Suppose the real risk-free rate and inflation rate are expected to remain at their current levels throughout the foreseeable future. Consider all factors that affect the yield curve. Then icentify which of the following shapes that the U.S. Treasury yield curve can take. Check all that apply. Upward-sloping yield curve Downward-sloping yield curve Inverted yield curve tdentify whether each of the following statements is true or false. Statements If infiation is expected to decrease in the future and the real rate is expected to remain steady, then the Treasury yield curve is downward sloping. (Assume MRP 0.) The default risk on walmart\'s short-term debt will be higher than the default risk on its long-term debt. The yield curve for a BBB-rated corporate bond is expected to be above the u.S Treasury bond yield curve. Yield curves of highly liquid assets will be lower than yield curves of relatively illiquid ssets. A U.S. Treasury yield curve is plotted in the following graph 16

Solution

Answer : is upward sloping yield curve

That is if their is risk free rate of return and inflation rate of return when these both are said to be constant this would result in upward sloping yield curve

If inflation is expected to decrease in future and real rate remains constant then yield curve is downward sloping - true

The default risk of Walmart short term debt is higher than default on its long term debt - true

It not the BBB Rated corporate bond - false

It is AA Rated corporate bond above US treasury bond yield curve

Yield curve of higely liquid assets is lower than yield curve of relatively liquid assets - true

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