$6\mathrm{.}4\%$ and $8\%$

Question $17$

$3$ pts

Inflation is expected to increase steadily over the next $10$ years, there is a positive maturity risk premium on both Treasury and corporate bonds, and the real risk$-$free rate of interest is expected to remain constant. Which of the following statements is CORRET:

The yield on any corporate bond must exceed the yields on all Treasury bonds.

The yied on $7-$year corporate bonds must exceed the yield on $10-$year Treasury bonds.

The stated conditions cannot all be true$-$they are internally inconsistent.

The yield on $10-$year Treasury securities must exceed the yield on $7-$year Treasury securities$.$

The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope