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:

Superior Function

In Jungian psychology, it refers to the most dominant and preferred way of thinking or feeling, characterizing an individual's personality.

Jungian Theory

A psychological concept developed by Carl Jung, emphasizing the importance of the individual psyche and the personal quest for wholeness.

Evidence

Information or facts that are used to support a conclusion, theory, or claim, typically gathered through observation, research, or analysis.

Superior Function

In psychology, particularly Jungian theory, the dominant aspect of an individual's personality or behavior, considered to be the most developed or exercised function.