The
real risk-free rate of interest is expected to
remain constant at 3% for the
foreseeable future. However, inflation is expected to
increase steadily over the next 30 years, so the
Treasury yield curve has an upward slope. Assume that the pure expectations theory holds. You are also considering two corporate bonds, one with a 5-year maturity and one with a 10-year maturity. Both have the same default and liquidity risks. Given these assumptions, which of these statements is CORRECT?