Over the Next Three Years,the Expected Path of 1-Year Interest

question 42

Multiple Choice

Over the next three years,the expected path of 1-year interest rates is 4,1,and 1 percent. The expectations theory of the term structure predicts that the current interest rate on 3-year bond is

• A)1 percent.
• B)2 percent.
• C)3 percent.
• D)4 percent.

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Definitions:

Longitudinal Method

A research design in which the same individuals are examined over a period of time, allowing for the observation of changes or development.

Cross-sectional Tests

Research methods or examinations conducted at a specific point in time to analyze data from a population or a representative subset.

Different Times

Moments or periods that are not the same, varying in many possible ways such as duration, significance, or point in history.

Correlation Coefficient

A numerical index that ranges from -1 to 1, reflecting the strength and direction of the relationship between two variables.