Which of the following statements is FALSE?
A)The plot of the relationship between the investment risk and the interest rate is call the yield curve.
B)Each of the last six recessions in the United States was preceded by a period with an inverted yield curve.
C)The nominal interest rate does not represent the increase in purchasing power that will result from investing.
D)A risk-free cash flow received in two years should be discounted at the two-year interest rate.

Question

Quizplus · Accepted Answer

The plot of the relationship between investment risk and interest rate is not called the yield curve. The yield curve actually shows the relationship between interest rates (or yields) and the time to maturity for debt securities of equivalent credit quality, typically government bonds.

Which of the Following Statements Is FALSE