1.Consider the following Treasury bond spot rates r1 = 12%, r5 = 10%, r10 = 8% and r30 =5% (the subscript indicates the year). These rates may be indicative of:

i. A decreasing inflation premium

ii. Potential worsening of economic conditions

iii. Forward Rates are first increasing then decreasing

iv. Corporate Credit Spread is expected to turn negative.

Answer rating: 100% (QA)

Lets analyze each statement based on the given Treasury bond spot rates i A decreasing inflation pre... View the full answer