If the Yield Curve Slope Is Flat for Short Maturities

question 30

Multiple Choice

If the yield curve slope is flat for short maturities and then slopes steeply upward 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 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)constant short-term interest rates in the near future and a decline further out in the future.

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Definitions:

1-methylcyclohexanol

A secondary alcohol that features a methyl group attached to a cyclohexane ring.

Cyclohexane

A saturated, cyclical hydrocarbon with the molecular formula C6H12, notable for its conformational flexibility and ring-flipping phenomenon.

Major Organic Product

The paramount product arising in the highest capacity from an organic chemical transformation.

Reaction Shown

Refers to demonstrating or describing a specific chemical reaction and its products or effects.