According to the Expectations Theory of the Term Structure

question 3

Multiple Choice

According to the expectations theory of the term structure

• A)the interest rate on long-term bonds will exceed the average of short-term interest rates that people expect to occur over the life of the long-term bonds,because of their preference for short-term securities.
• B)interest rates on bonds of different maturities move together over time.
• C)buyers of bonds prefer short-term to long-term bonds.
• D)buyers require an additional incentive to hold long-term bonds.

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Definitions:

Personality Measures

Tools or tests designed to quantitatively assess individual characteristics and differences in personality.

Subjective

Based on personal feelings, tastes, or opinions rather than external facts or evidence.

Biases

Systematic and often unfair inclinations or prejudgements towards particular people, groups, or ideas.

Objective Tests

Assessments that measure an individual's psychological attributes using procedures that minimize subjective judgment, ensuring that results are scored in an unbiased or uniform manner.