Question: Which of the following is most correct?
a. If the expectations theory is correct (that is, maturity risk premium = 0) then an upward sloping yield curve means that the market believes that interest rates will rise in the future.
b. A 5-year corporate bond may have a yield less than a 10 year treasury bond.
c. The yield curve for corporate bonds may be upward sloping even if the Treasury yield curve is flat.
d. Statements b and c are correct.
e. All the statements above are correct.