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Pure yield curve is downward slopping

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Based on your analyses, today's pure yield curve is downward slopping. You believe in pure expectations hypothesis of term structure. Which of the following statements is/are true?

A. You would buy an AAA-rated bond with coupon rate of 7% and time to maturity is 30 years rather than buy BBB- rate bond with coupon rate of 7% and time to maturity of 30 years.

B. You would sell an AAA-rated bond with coupon rate of 7% and time to maturity is 30 years rather than sell BBB- rate bond with coupon rate of 7% and time to maturity of 30 years.

C. You would buy a treasury bond with coupon rate of 8% and time to maturity is 30 years a yield to maturity of 7% rather than buy a treasury bond with coupon rate of 4% and time to maturity is 30 years and yield to maturity of 7%.

D. You would sell a treasury bond with coupon rate of 4% and time to maturity is 30 years a yield to maturity of 7% rather than sell a treasury bond with coupon rate of 8% and time to maturity is 30 years and yield to maturity of 7%.

Reference no: EM132555210

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