g Which one of the following statements is/are true? Multiple Choice A. If the expectation for inflation is that it will steadily increase, the term structure of interest rates will be upward sloping. B. If a small rural city issues municipal bonds and there is no active secondary market to sell the bonds, investors will require a higher liquidity premium compared to a bond with a very active secondary market. Both A and B are true. Neither A nor B are true.

Question

Business

Damian Greene

11 November, 13:36

g Which one of the following statements is/are true? Multiple Choice A. If the expectation for inflation is that it will steadily increase, the term structure of interest rates will be upward sloping. B. If a small rural city issues municipal bonds and there is no active secondary market to sell the bonds, investors will require a higher liquidity premium compared to a bond with a very active secondary market. Both A and B are true. Neither A nor B are true.

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Answers (1)

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Isabella Cisneros · Answer 1

The answer is "Both A and B are true".

Explanation:

In the given statement both choices were correct which can be described as follows:

Only if it is expected to increase steadily, that phrase interest rate framework will drop further. If a rural farming community offers bond funds, as well as the securities, are not offered on a qualified resale market, the market price to shareholders is greater than for bonds with an extremely active second-hand market.