Question: If the yield curve is normal , what is the interest rate on a 20-year Treasury bond, compared to the interest rate on a 5-year

If the yield curve is normal, what is the interest rate on a 20-year Treasury bond, compared to the interest rate on a 5-year Treasury bond?

Select one:

a.

The interest rate on the 20-year bond will be more than the interest rate on the 5-year bond.

b.

The interest rate on the 5-year bond will be more than the interest rate on the 20-year bond.

c.

The interest rates of the two bonds will be equal.

d.

It is impossible to tell without knowing the relative risks of the bonds.

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