If the Yield Curve Is Flat for Short Maturities and Then

question 72

Multiple Choice

If the yield curve is flat for short maturities and then slopes downward for longer maturities,the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting

• A)a rise in short-term interest rates in the near future and a decline further out in the future.
• B)constant short-term interest rates in the near future and a decline further out in the future.
• C)a decline in short-term interest rates in the near future and a rise further out in the future.
• D)a decline in short-term interest rates in the near future and an even steeper decline further out in the future.

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Definitions:

Scaffolding

Temporary support that permits a child to bridge the gap between his or her current competence level and the task at hand.

Guided Imagery

A technique used in therapy and self-improvement that involves using mental images to help relax or positively change behaviors.

Zone of Proximal Development

A concept in developmental psychology referring to the difference between what a learner can do without help and what they can achieve with guidance and encouragement from a skilled partner.

Effective Scaffolding

An educational approach involving the provision of temporary support to students or learners to help them achieve a task or understand concepts that they would not be able to grasp independently.