Exam 5: Factors Affecting Yields

The difference between the yield on an on-the-run Treasury security and a comparable maturity off-the-run security is

Federal tax reform that lowers marginal tax rates on income will

A 10-year Treasury note has a yield of 2.71 percent, and a Baa (BBB) corporate bond with comparable maturity has a yield of 4.93 percent. The difference in yields owes to

The current yield on a 2-year Treasury note is 1.21 percent and that on a 3-year note is 1.70 percent. This means that the implicit 1-year forward rate in year 3 is

If the Treasury yield curve is flat

More risk of holding bonds will

According to the term (liquidity) premium of the term structure, the term premium increases with the maturity of the security because of

If the yield curve is positively sloped when averaged for long periods of time, this implies that

Should long-term interest rates equal an average of current and expected future short-term interest rates, this would be consistent with

In an economic expansion

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