If the Expected Path of Interest Rates on One-Year Bonds

question 55

Multiple Choice

If the expected path of interest rates on one-year bonds over the next five years is 2%, 4%, 3%, 2%, and 1%, the expectations theory predicts that the bond with the lowest interest rate today is the one with a maturity of

• A)one year.
• B)two years.
• C)three years.
• D)five years.

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Definitions:

Antifeminist Movement

A social and political movement opposing feminism and its efforts to change societal norms related to gender equality and women's rights.

Consequence

A result or effect of an action or condition.

Détente

A period of improved relations between two countries that were previously in conflict with each other, notably used to describe the easing of tensions between the United States and the Soviet Union during the Cold War era.

Nixon

37th President of the United States, known for his policy of détente with the Soviet Union and the scandal of Watergate that led to his resignation.