The Term Structure of Interest Rates

question 49

Multiple Choice

The term structure of interest rates

• A)represents the variation in yields for related instruments differing in maturity.
• B)reflects differing tax treatment received by different instruments.
• C)always results in an upward-sloping yield curve.
• D)usually results in a downward-sloping yield curve.

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Definitions:

Cause-Effect Relationship

A connection between two events where the first event (the cause) makes the second event (the effect) happen.

Correlation

A statistical measure that describes the extent to which two variables change together, but does not imply causation.

Experimenter Bias

A form of bias introduced by the experimenter whose expectations about the outcome of the experiment can be subtly communicated to the participants.

Dependent Variable

The variable in an experiment that is expected to change in response to manipulations of the independent variable.