Standardization implies that power and control should be centralized

When considering portfolio risk management, the lender needs to be concerned with which of the following:

A: Reserves; B: Diversification; C: Liquidity; D: All of the above.

James is a rational investor wishing to maximize his return over a 20-year period. The current yield curve is inverted with one-year rates at 5.00% and 20-year rates at 3.50%. James will invest in the lower-rate 20-year bonds if:

A) he thinks rates will fall in the future and locking in long-term rates today may provide the highest long-run average return. B) he thinks rates will rise in the future and locking in long-term rates today may provide the lowest long-run average return. C) he thinks rates will remain flat at 5% in the future and locking in long-term rates today will prevent him from appearing greedy to those without this investment opportunity. D) he thinks rates will rise in the future and locking in long-term rates today may provide the highest long-run average return.