Which of the statements below is FALSE regarding interest rates in the period 1950-1999?
A) Inflation averaged 4.05%.
B) The real rate averaged 1.18%.
C) The default premium averaged 7.05%.
D) The maturity premium averaged 1.28% (for twenty-year maturity differences).
Answer: C
Explanation: C) The default premium averaged 0.49% (for AAA over government bonds) over the 50-year period from 1950-1999.
Business
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