The Term Structure of Interest Rates Refers to

question 29

Multiple Choice

The term structure of interest rates refers to

• A)the general observation that the yield on 30-year government bonds is less than the yield on 90-day Treasury bills.
• B)the variance of the different interest rates available in the economy.
• C)the composition of the market interest rate.
• D)the variation of the market interest rate over the span of one year.
• E)the pattern of interest rates that corresponds to the varying terms to maturity of government securities.

Explain the role of supply and demand in determining rent and interest rates.

Recognize the impact of innovation on profits and the factors influencing this.

Calculate and understand the concept of the present value of future money.

Identify different views on competition and entrepreneurship in profit theories.

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Definitions:

Groupthink Theory

A mental occurrence within a group where the pursuit of agreement or uniformity leads to illogical or ineffective choices.

Group Polarization

The tendency for a group to make decisions that are more extreme than the initial inclination of its members, either more conservative or riskier.

Risky Shift

The phenomenon where groups make riskier decisions than individuals would.

Group Norms

Unwritten rules or expectations within a group that dictate the behaviors, values, and attitudes of its members.